Latest Retirement Confidence Survey Reveals Job-Status Concerns
EBRI and Greenwald & Associates’ refielding of the RECS survey questions explores the toll the market and COVID-19-related turmoil is taking on more than 2,000 retirees and workers.
By Neil Lloyd, Head of US Defined Contribution and Financial Wellness Research, Mercer
In addition to the usual Annual Retirement Confidence Survey, the Employee Benefit Research Institute (EBRI) and Greenwald & Associates conducted a supplemental refielding of some selected questions March 20–30, 2020 to see what toll the market and COVID-19-related turmoil is taking on more than 2,000 retirees and workers. The RCS, the longest running survey of its kind, and this supplemental survey was released on April 23, 2020.
This week I spoke with Craig Copeland, EBRI’s Senior Research Associate and co-author of the report, to glean some additional insights. (My intent here is not to summarize the results in this Q&A; the report contains a detailed executive summary and analysis. Disclosure: Mercer is one of the founding members of EBRI (over 40 years ago). Neil Lloyd, currently serves as EBRI’s Research Chair.)
Neil Lloyd: Craig, can you give some perspective on the decision to refield the survey, and any interesting takeaways that came from that?
Craig Copeland: The RCS has been fielded in January going back a number of years. We completed the project on schedule, and results were in line with expectations given the state of the economy. However, as we prepared to publish our results, the pandemic struck, which caused us to question whether the survey responses were still applicable. We decided to refield specific attitudinal questions in late March.
Interestingly, as late as the end of March, retirement confidence of both retirees and workers generally had held at January levels. That was before the widespread unemployment that occurred the first weeks of April. However, the retirement picture was bifurcated: rosy for workers who maintained their jobs, but predictably less positive for those who had lost or expected to lose their jobs in the March survey. Across the board, the share who were confident in each of the aspects of retirement was sharply lower (up to 20 percentage points in many cases) for those who lost or expected to lose their jobs compared with those who didn’t.
NL: One observation I noticed was that respondents seemed satisfied with their DC plans and the investment options available. I know you asked a question about what plan improvements would be desirable. What responses did you get?
CC: Of the workers that were offered a workplace retirement savings plan, three-quarters or more were satisfied overall with their defined contribution (DC) plans and the investment options available. However, when asked what their plans could do better, one aspect really stood out — explaining what their accumulated savings indicated in terms of income in retirement and whether their current level of savings was on track. Specifically, 39% of those offered a workplace retirement savings plan said that the most valuable improvement would be a better explanation of how much retirement income their savings will produce. Similarly, 30% said a better explanation for whether they are on track with their retirement savings would be the most valuable. Among the other top four potentially valuable improvements were a wish for more one-on-one, in-person education (28%), and access to more post-retirement investment options (24%).
NL: You mentioned that financial wellness programs are welcomed by employees, yet few plan sponsors offer them. What types of wellness programs do workers value the most?
CC: When asked about specific workplace educational or financial well-being programs’ helpfulness in better preparing or saving for retirement, more than four-fifths of workers said that certain programs would be very or somewhat helpful. In particular, programs that help plan for health care expenses in retirement (86% very or somewhat helpful); calculate how much they need to save for a secure retirement (85%); educate or offer advice on how to convert savings into retirement income (82%); and educate or offer advice on how to manage competing financial priorities (80%) all had strong support.
The one type of program that did not receive broad-based support was student-loan debt assistance, where only 49% of workers said it would be helpful. However, responses were stronger for the youngest workers (ages 25–34). In contrast, 77% of workers thought access to emergency savings accounts or programs would be helpful.
NL: Retirement income remains a persistent challenge for both workers and retirees. Can you address the different perspectives between the two groups?
CC: Accomplishing the goal of converting savings into sufficient income in retirement has been challenging for many. Consequently, 74% of workers said that they intend to work in retirement to make ends meet. While this seems like a plausible plan, only 27% of retirees say that they have actually worked for pay since they retired. This finding has been consistent going back nearly 25 years.
NL: Any final thoughts, Craig?
CC: The potentially ticking time bomb is debt. With many Americans losing their jobs, debt is likely to pile up. The RCS clearly shows that Americans who have a problem with debt also have issues with the ability to save for retirement. For example, seven in 10 workers with non-mortgage debt said it is negatively impacting their ability to save for retirement in general, and half suggest it’s impacting their ability to participate in their employer’s retirement plan or other benefits. If Americans have any hope of improving their retirement prospects, they must first deal with any debt issues. It’s a terrible Catch-22: the pandemic will increase the number of Americans having a problem with debt, thereby limiting their ability to improve their retirement prospects.
NL: Thanks, Craig. For readers looking for more information, a lot more detail on the RCS is available on the EBRI website.
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