Latest Research Highlights How Employers Can Help Close Racial and Ethnic Retirement Savings Gaps With Financial Wellness
Employers have the opportunity to tackle social inequality through defined contribution plans
Northampton, MA – News Direct – T. Rowe Price
Aug. 24, 2021 / 3BL Media / – T. Rowe Price, a global investment management firm and retired leader, today released a series of white papers featuring the results of its sixth annual survey of retirement savings and spending that are focused on financial attitudes and behavior of 401 (k) savers and retirees. Among the notable results, the study found that the savings rates of Black and Latinx 401 (k) are lower compared to their white counterparts. The median procrastination rates were 5% and 8% for black and Latinx participants, respectively, compared to 9% for white participants. Additionally, Black and Latinx respondents were more likely to say they have student loans, medical and other debts, which further affects their ability to save for retirement.
DC plans like 401 (k) s are one of the few places where access to financial advice, counseling, and education in support of life financial goals is equally encouraged. This offers plan sponsors the unique opportunity to directly close plan participation and savings gaps through the availability of financial wellness tools and services and better plan design.
The first step for employers can be so simple as to solicit under-represented minority workers on what would help improve financial health. In addition, employers could also include plan designs that prioritize participation, such as automatic enrollment, automatic elevation, or the use of incentives such as B. the adjustment of employer contributions to increase the contribution rates.
“Employers have the opportunity to promote diversity, equity and inclusion in defined contribution plans and to help tackle wider social inequality,” said Dee Sawyer, director of Individual Investors and Retirement Plan Services, T. Rowe Price. “A better understanding of the challenges facing underrepresented groups can help employers and finance professionals develop strategies to ensure participants of all races and ethnicities thrive financially and successfully retire.”
The story goes on
Further findings from research are:
55 percent of respondents believe that despite insufficient savings, they are saving enough to enjoy a comfortable retirement. The remaining 45% either know they are not saving enough or are unsure whether their pension contributions are enough.
Confidence in retirement finances decreases as retirement approaches, but retirees have fewer financial worries compared to employed people. For example, 61% of retirees believe they will have enough money to pay for health care when they retire, while only 39% of working baby boomers think so. Likewise, 47% of retirees believe they will live as well or better than they did in their time, while only 38% of baby boomers think so.
27 percent of the retired pensioners questioned work or are looking for work, many do so voluntarily and not out of necessity: 49% work for meaning and fulfillment, 41% enjoy spiritual stimulation and 35% work for social commitment.
Forty-three percent of retirees said they had advice from a financial professional, with the majority (61%) saying they did their retirement planning alone or with their spouse. This suggests that the need for help with financial health does not end with retirement. With retired retirees faced with new priorities and needs, and some even continue to work, retirees need guidance as they transition from a saving to a spending mentality
“Both past and current retirees can benefit from financial wellness programs,” said Josh Dietsch, vice president, thought leader for retirement at T. Rowe Price. “Enhancing the value of positive financial action, regardless of where an individual is on the retirement journey, can help improve confidence and outcomes.”
The retirement savings and spending survey was conducted by NMG Consulting on behalf of T. Rowe Price and included a sample of 3,420 401 (k) retirement plan participants, 631 participants who were not eligible for a 401 (k) plan and 1,007 retirees with a rollover IRA or balance on the plan. The survey was conducted online from June 5 to 24, 2020. This is the sixth edition of the study after the 2014, 2015, 2017, 2018 and 2019 editions. The three phases of the 2018 study focused on financial advice, retirees and gender, and the 2019 phases focused on retirement confidence and retirement income . Data from previous studies are used for comparison purposes in this report.
About T. Rowe Price T. Rowe Price (NASDAQ-GS: TRAW), founded in 1937, is an independent global asset management company with $ 1.62 trillion in assets under management as of July 31, 2021. The company focuses on providing investment excellence and retirement services to institutional, intermediate and retail investors. Our strategic investment approach, driven by independent thinking and guided by rigorous research, helps clients feel confident in pursuing financial goals. Further information is available at www.troweprice.com, Twitter, YouTube, LinkedIn, Instagram or Facebook.
Contact T. Rowe Price, Public RelationsMonique [email protected]
Laura [email protected]
Check out additional multimedia and ESG stories from T. Rowe Price on 3blmedia.com
View source version on newsdirect.com: https://newsdirect.com/news/t-rowe-price-latest-research-highlights-how-employers-can-help-close-racial-and-ethnic-retirement-savings- gaps -with-financial-wellness-249461571