Study: Texas Workers Saving Less For Retirement

June 2, 2003 ( - Texas workers are slightly less likely than workers nationally to say they or their spouse have saved for retirement and to say they are currently saving.

Overall, only 66% of Texas workers said they or their spouses have saved for retirement, versus 71% who responded in the affirmative nationally. The same differential also existed among Texas workers that are currently saving (57%) when compared to the national sample (62%), according to the 2003 Texas Retirement Confidence Survey (RCS), sponsored by the Employee Benefit Research Institute (EBRI), American Savings Education Council (ASEC) and Mathew Greenwald & Associates.

Much of this may have to do with the relatively low number of Texas workers (36%) who report they or their spouse have tried to calculate how much they need to save to be comfortable by the time they retire, compared with more than four in 10 workers nationally. Further, Texas workers are also less likely to have savings or investments in addition to what they have set aside for retirement (45%) when compared to the 51% nationally.

Among those that have put pen-to-paper, 46% of Texas workers, compared with 39% of American workers overall, think they will need less than 60% of their preretirement income to live comfortably in retirement, with a nother 11% saying they will need 60% to 69% of their preretirement income. Only 21% of Texas workers anticipate needing the level of preretirement income that financial experts recommend (70% to 79%). Of those, 17% anticipate needing 70% to 79% and 14% anticipate needing 80% or more.

Confidence Measures

Regardless, one-fourth of Texas workers are very confident they will have enough money to live comfortably throughout their retirement, with 44% saying they are somewhat confident.

Similar results were seen when it comes to more specific financial aspects of retirement. One-third are very confident about having enough money for basic expenses in retirement, while approximately one-fourth each are very confident they are doing a good job of preparing financially for their retirement and that they will not outlive their retirement savings.

Texas workers closely mirror workers in the National Retirement Confidence Survey released in April (See Retirement Confidence Based on Shaky Assumptions? ) in several areas of their financial planning. Overall, Texas workers are just as likely as workers nationally to be very confident that they have done a good job preparing for retirement (24% each) and that they will not outlive their retirement savings (24% versus 20%). “The 2003 Texas RCS finds that Texas retirees, like Texas workers, have confidence levels similar to those found nationally,” said Mathew Greenwald, president of Greenwald.

Racial Makeup

“Texas is a fascinating state to survey because of the size of its population-it is second only to California-and the diversity of its communities,” said ASEC President Don Blandin. “These survey findings will provide insight about Texas workers and retirees that, hopefully will help develop better savings messages and strategies to get individuals to focus on their financial future.”

Among those groups, Anglo-American workers in Texas show greater confidence than minorities do about their financial preparations for retirement. While these differences are not always apparent in the proportion that say they are very confident about their preparations, they become quite noticeable when those who say they are somewhat confident are also included.

For example, roughly two in 10 Anglo-Americans (24%), African-Americans (21%), Asian-Americans (18%), and Hispanic-Americans (16%) say they are very confident about having enough money for a comfortable retirement. However, almost half of Anglo-Americans (46%), compared with smaller proportions of African-Americans (36%), Asian-Americans (29%), and Hispanic-Americans (26%) indicate a level of somewhat confident.

Additionally, while seven in 10 Anglo-American in Texas report having saved, that number drops significantly among Asian-Americans (60%). African-Americans (48%) and Hispanic-Americans (42%). The differential is similarly reported among the proportions that report doing a needs calculation. Toward the top end of the scale are Anglo- and Asian-American workers (45% each), followed by African-American workers (26%) and Hispanic-American workers (15%).

Many of the differences between these racial and ethnic groups are related to the disparities in their household income. However, some differences persist even when income is held constant, especially between Anglo-American workers and Asian-American and Hispanic-American workers. This suggests that linguistic and cultural differences do play a role in the retirement planning and savings behaviors of Texas minority groups.

Like their working brethren, Texas retirees have confidence levels similar to those found nationally. Nearly four in 10 Texas retirees are very confident that they will have enough money to live comfortably throughout their retirement years with another third saying they are somewhat confident. Similarly, 41% are very confident that they will have enough money to take care of basic expenses during retirement and that they will have enough money for medical expenses in retirement (39%). Almost the same proportion are very confident that they did a good job of preparing financially for retirement (37%) and that they will not outlive their retirement savings (36%). Nearly three in 10 are very confident that they will have enough money to pay for long-term care. Overall, retirees with annual household income of at least $35,000 are more likely than those with lower income to be very confident about each of these financial aspects of retirement.

On average, Texas retirees left the work force at the same age as American retirees nationally (62 years), but they are somewhat less likely to say that they never expected to retire (2% of Texas retirees versus 9% of American retirees). Conversely, Texas workers are more likely to say they will never retire (10% of Texas workers versus 6% of American workers nationally), though both groups on average say they expect to retire at age 65.

Breaking it down:

  • 17% of Texas workers expect to retire before age 60
  • 20% think they will retire between the ages of 60 and 64
  • 25% plan to retire at age 65
  • 18% think they will retire at age 66 or later.

Hispanic-American workers may be less likely than others to have thought about the timing of their retirement, with 20% saying they do not know when they will retire, compared with 7% of Anglo-Americans, 8% of Asian-Americans, and 13% of African-Americans.

Off To Work?

Texas workers age 45 and older are less likely than their national counterparts to say they have decided within the past year to postpone retirement (16% of Texas workers versus 24% ofworkers nationally). Instead, over three-fourths say the age at which they expect to retire has not changed (76% versus 66%) and 7% (compared with 8% nationally) have decided within the last year to retire at a younger age. Among those age 45 and older living in Texas, Asian-Americans (6%) are less likely than Anglo-Americans (16%), African-Americans (18%), and Hispanic-Americans (14%) to report they have postponed their retirement age in the past year.

On average, Texas workers anticipate a retirement of about the same length as workers nationwide-about 20 years:

  • 29% think they will be retired for 19 years or less
  • 35% think they will be retired for 20 to 29 years
  • 14% believe they will be retired for 30 years or more
  • 20% do not know how long their retirement will last.

Hispanic-Americans (52%) are far more likely than Anglo-Americans (16%), African-Americans (33%), and Asian-Americans (21%) not to know this key component of retirement planning.

However, when it is all said and down, a majority (68%) of Texas workers say they think they will work for pay after they retire, almost three times the proportion of Texas retirees who indicate they actually worked for pay in retirement (26%). Broken down by ethnicity of those preparing to work:

  • 70% Anglo-American workers
  • 64% Asian-American workers
  • 54% Hispanic-American workers
  • 52% African-American workers

In particular, Anglo American women (68%) are more likely than African-American (48%) and Hispanic-American (47%) women to expect to work. While improved health status in retirement and increased interest in work may lead to increased work force participation by retirees, some future retirees who are relying on employment for retirement income may find themselves disappointed.

These findings are part of a Retirement Confidence Survey in the state of Texas. The results of this survey are compared with the 13thannual Retirement Confidence Survey, a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The Texas state survey was conducted from February 6 to March 10, 2003 through 14-minute interviews with 1,000 individuals (780 workers and 220 retirees) age 25 and older. A copy of the full report can be found at