Wellness Study Touts CFPs
Original post benefitspro.com
Only 22 percent of employees tracked in Financial Finesse’s 2015 year in review report being on track for retirement.
The provider of workplace financial wellness programs says that is a slight improvement from 2014. Of those that are not prepared, 81 percent have never used a financial calculator to estimate their retirement preparedness.
While the number of retirement-ready workers remains bleak, those participants who have repeated engagements with planning tools, and financial planners, are showing marked improvement in retirement readiness.
Enhancements in retirement workplace plan design, like auto-enrollment and auto-escalation, and technology that addresses asset allocation are vital tools for addressing workers’ retirement preparedness.
Enrollment in 401(k) plans is up, there's more interest in HSAs, and participants are keen on using technology to interact...
But the Financial Finesse’s data suggests those tools alone are not enough.
A good portion of the review is committed to comparing retirement readiness of those savers who engage in live interactions with financial planners.
About half of participants that had five or more interactions with a certified financial planner report being on track for retirement.
Levels of confidence drop in lock step with the number of interactions with financial planners: 32 percent of those with three to four interactions say they are on track to retire with adequate savings; 31 percent with one to two interactions believe as much; and only 21 participants who only interact with online planning tools say they are on track to retire with enough savings.
Interacting with CFPs also translates to higher confidence with investments and how they are allocated, as 64 percent of participants with five or more interactions say they are invested appropriately, compared to only 42 percent who use an online planning tool but don’t seek live financial advice.
Overall, retirement readiness is lacking across generations. Last year, only 30 percent of baby boomers say they are on track to reach their retirement goal, which was unchanged from the previous year.
Only 22 percent of Gen Xers and 16 percent of millennials said they are on track to retire well.
Debt is a major obstacle for boomers’ retirement readiness, the report says, as 42 percent of financially distressed boomers have no plan in place to pay off their debt, and increase from the previous year.
Participation rates in workplace retirement plans was high across all age groups, as even 73 percent of workers under age 30 report being enrolled in a plan; 91 percent of pre-retirees participate in their workplace plan.
Despite high rates of enrollment, financial planners and participants sited insufficient retirement savings as the top financial vulnerability for all age groups.