American workforce matures, but their knowledge of retirement finance may be getting worse.
As the American workforce matures there is an ever-increasing urgency to have a financially literate population; one that fully comprehends the pending danger associated with living at the confluence of ‘not saving enough money to retire in conjunction with living longer than originally anticipated.’ Over the last 30 years the workforce has experienced a shifting of the responsibility for the funding of retirement benefits from the employer directly to the employee. As the executive Director of The Plan Sponsor University (TPSU), I have observed Plan Sponsor Trustees and Fiduciaries describe their employer’s position on preparing the employee-base for retirement – and the overwhelming majority express the position that offering access to a qualified retirement plan is the extent of what a company needs to provide. This statement is normally followed by the company belief that the funding of the retirement benefit is solely the responsibility of each plan participant.
Employer representatives at TPSU Programs consistently express the opinion that service providers should be taking more responsibility for the education of plan participants on:
- The importance of Saving
- The basics of Investing; and
- Anticipating Retirement Spending needs.
Professor Amin Rajan, Chief Executive, CREATE-Research, describes similar findings in a recently released research report titled “Financial Literacy: Smoothing the path to improved retirement savings.” Professor Rajan expresses the implications of inaction and how that may impact for all future retirees. Millennials, may be at a greater risk than other demographics since they are expected to spend as many years in retirement as they do in the workforce. The major concern for Millennials is based upon the foundation of life expectancy exceeding the retiree’s anticipated retirement age.
The report points out that Retirement planning is much more difficult than the decision of whether one purchases a home or not. Retirement decisions are often driven by changes in family, health, job and market circumstances.
One measure of the success of any society is based upon the quality of life the elders enjoy after decades of work. As the American workforce adjusts to the shifting demands of a self-funded retirement environment, employer sponsored Financial Literacy will continue to play an increasing role.
