Mismatch between attitude and action
The recession is a key reason for the disparity between consumers’ actions and attitudes toward debt.

  • Respondents with full-time employment dropped by eight points since 2007.

  • Household income and household assets dropped.

  • Nearly half (46 percent) of respondents said their household income barely covers necessities.

  • Thirty-five percent indicate that no matter how hard they try, they do not expect their financial situation to improve.

And yet, Americans also seem to be able to look beyond the current crisis and the need to boost their bank accounts; most expect to pay off all nonmortgage debt in the next five years. Their estimates are probably overly optimistic, however, considering that two-thirds of the Silent Generation and 80 percent of the younger generations are in debt today.

2009 Survey of Financial Values and Debt, Securian Financial Group, May 2009.

 

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Employer focus
Employees seek help with retirement planning

Retirement is supposed to be stress-free — a time to reap the rewards for years of hard work. But the current recession has blown a hole in that ideal.

Although Americans are now spending less and saving cash for emergencies, new research by Securian Financial Group reveals they are making little progress toward what should be a key goal — a debt-free retirement.1 Overall, the amount of debt reported in the recent study has not changed since Securian’s 2007 survey. The exception: Baby Boomers, who have more debt than ever. Nearly one-fourth of Boomers owe at least $50,000 in nonmortgage debt, a 10-point spike over 2007 results. Little wonder that a third of retirees, as reported by another Securian study (pdf, 2.25Mb), said they would have prepared for retirement differently, had they known what they do now.2   

Lacking confidence in their ability to effectively save and invest for retirement, more employees are seeking support from their employer.3 Specifically, they express interest in having access to financial planners for their qualified retirement plan(s), as well as retirement planning seminars sponsored by their employer.

How employers are filling the gap

Some employers are already stepping up efforts to promote the financial wellness of their employees. Pepsi Bottling Group (PBG) launched HealthyMoney, an educational program loaded with financial tools. The program incorporates group workshops, online resources, one-on-one sessions with financial planners and other outreach and education initiatives. Since the program’s introduction, PBG has experienced increased participation in all its voluntary benefits offerings, including 401(k) enrollment.4

Research conducted on similar financial education offered through the workplace affirms the overall effectiveness of these programs. After participating in financial workshops, employees report increased confidence in their ability to make investment decisions and improvement in their financial situation.

Some employers are aiming efforts directly at increasing employee involvement in retirement preparation, according to the 2008 401(k) Benchmarking Survey. By increasing the appeal of 401(k) offerings, whether it’s by enhancing the product or through simple education and planning tools, employers can encourage ongoing retirement savings even during times of economic uncertainty.5 More companies are implementing step-up provisions that automatically increase 401(k) deferral percentages on the participant’s behalf. Others are providing the opportunity to contribute to Roth 401(k) plans.

Current economic challenges aside, providing financial education may be becoming more of a necessity than a temporary trend. Forward-thinking employers understand that attractive retirement and financial planning benefits not only help retain existing talent, but also can be effective recruiting tools.

Sources

12009 Survey of Financial Values and Debt, Securian Financial Group, May 2009.
The research, a follow-up to Securian’s 2007 debt study, was conducted by its Market Research department in collaboration with Mathew Greenwald & Associates, Inc., Washington, D.C.

2 Financial Challenges and Life Experiences of the 70-75 year old Millionaire Investor, Securian Financial Group, September 2008, www.securian.com. The survey, conducted by Spectrem Group, polled 227 retirees between the ages of 70½ and 75 with $1 million in net worth.

3 Study of Employee Benefits Trends: Findings from the national survey of employers and employees.

4Weaver, Peter, & Rollins, Gina. Easing the burden of employees’ debt. HRMagazine, July 1, 2008.

5Employers Make 401(K) Plan Participation Easier for Employees. The survey was conducted by Deloitte, the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialists (ISCEBS).