The report also points to women and low-income employees as the two other groups with the most room for improvement when it comes to reaching a financially secure retirement. According to the report, just 17% of both women and Millennial workers and 10% of low-income employees said they are confident they will be able to meet their retirement income goals.
Overall, one in five (20%) of those interviewed for the report said they were on track to meet their previously determined retirement benchmarks—up from 14% during the survey’s first iteration, released in 2011.
A lower percentage of Millennials (29%) reported having used a retirement calculator to project future income needs this year, compared with the 32% measured in 2012. A smaller percentage (84%) of low-income respondents reported participating in their workplace’s 401(k) plan than the 86% observed in 2012. Additionally, the number of low-income workers feeling confident in their ability to reach income replacement goals fell by 1 percentage point this year.
And even though a greater percentage of employees have indicated taking a risk tolerance assessment or taking action to rebalance their investment accounts, 61% of respondents indicated they have not taken the time to use a financial calculator to conduct a future needs assessment.
In a statement, Financial Finesse CEO Liz Davidson urged plan sponsors and advisers to start thinking more deeply about the lack of interest displayed by younger investors, whose retirement plan payouts are still decades away.
“There is a lot of attention on Baby Boomers’ lack of preparedness because of their proximity to retirement,” Davidson said. “More attention should be paid to the savings behaviors of at-risk groups. ... Although they have more time than the Boomers and Gen Xers, they face far more economic and financial challenges than any other demographic.”
Such challenges, according to the report, include fewer government and corporate benefits, longer life expectancies, expected increases in taxes and inflation, burgeoning health care costs and extensive uncertainty in the capital markets.
“We have the largest generation in history facing the largest retirement planning challenges in history,” Barbara Delaney, founder of retirement plan advisory firm StoneStreet Equity, said. “We have to do a lot more.”