Higher Education Employees More Confident than U.S. Workforce about Retirement
Greater Propensity to Save, Plan and Seek Advice Bolsters Positive Outlook
NEW YORK, June 23, 2010
The higher education community is markedly more confident than the U.S. workforce at large about the prospect of a financially secure retirement, according to a new survey released by the TIAA-CREF Institute.
Twenty-six percent of college and university employees (including faculty, administration, and other staff) are very confident that they will have enough money to live comfortably throughout retirement, compared with only 10 percent of U.S. workers. In addition, 54 percent of higher education workers are somewhat confident compared with 38 percent of all workers.
“In our experience, the difference in retirement outlook is driven by a number of underlying behavioral factors. Individuals in the higher education workforce are more likely than U.S. workers to save for retirement, set a savings goal, and seek investment advice from a financial advisor,” said Ed Van Dolsen, chief operating officer of TIAA-CREF. “Another very important factor is that higher education employees have access to retirement plans that are designed to provide lifetime income, and many plan to annuitize assets in retirement.”
The survey also examined the issue of retiree health care, a significant concern among all workers, including those in higher education. Among higher education employees, 23 percent are very confident that they will have the financial resources to cover medical care in retirement, and 52 percent are somewhat confident; by comparison, 12 percent of all U.S. workers are very confident they will be able to afford these expenses, and 37 percent are somewhat confident. The findings indicate that individuals may seek to postpone retirement if they feel unable to cover their health care costs, which has obvious workforce planning implications.
Compared to U.S. workers, higher education employees are more likely to take a number of steps to prepare for retirement, according to the survey. These measures include:
– Saving for Retirement: Ninety percent of college and university employees are currently saving for retirement, compared to 60 percent of all U.S. workers.
– Setting a Retirement Goal: Sixty-one percent of higher education employees have tried to calculate the amount they will need to save to fund a comfortable retirement. By comparison, 46 percent of all U.S. workers have attempted to determine this goal.
– Seeking Objective Investment Advice: One-half of college and university employees sought investment advice from a financial advisor within the past year, compared with one-third of U.S. workers.
– Planning for Income in Retirement: One-quarter of college and university employees consider it very likely that they will purchase a payout annuity in retirement, compared with 11 percent of U.S. workers.
Primary defined contribution plans in higher education are fundamentally different than the typical 401(k) plan in the private sector due to the fact that participation is often mandatory, employer and employee contributions are often non-discretionary and generally higher than those in the private sector, and employees have the option to annuitize their savings to ensure a stream of income in retirement – which is rarely the case with 401(k) plans. These distinctions can help encourage smarter saving and promote greater confidence overall, particularly in a challenging economic environment.
Read the Full Report
The 2010 Higher Education Retirement Confidence Survey is available via the TIAA-CREF Institute website: http://www.tiaa-crefinstitute.org/articles/ti_confidencesurvey0610.html.
About the 2010 Higher Education Retirement Confidence Survey
The Higher Education Retirement Confidence Survey was conducted in conjunction with the annual Retirement Confidence Survey sponsored by the Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates (MGA). More than 500 individuals working in higher education were surveyed by telephone in 2010 by Mathew Greenwald & Associates (MGA) on behalf of the TIAA-CREF Institute. Survey results are representative of the higher education workforce – faculty, administrators and others employed by colleges and universities in the U.S.
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $426 billion in combined assets under management (3/31/10) and the leading provider of retirement services in the academic, research, medical and cultural fields.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
TIAA-CREF Institute is a division of Teachers Insurance and Annuity Association (TIAA), New York, NY.
Chad Peterson, TIAA-CREF
firstname.lastname@example.org, 704 988-6811