Retirement Study Reveals Predictors for Retirement Planning

A combination of two recent studies that looked at how prepared Americans are for retirement showed that in addition to only one-fifth of the population feeling ready, according to the Financial Finesse study, various demographics are strong predictors of preparedness levels, according to the Vanguard How America Saves 2014 survey. Here are some of the predictive factors for level of retirement preparation:

• Income. Just under half of employees that bring in at or below $30,000 annually were participating in an employee retirement plan that they were eligible for. That number jumped to 87% for those with an annual income of at least $100,000.
•  Industry. Finance sector employees participated in their employer retirement plans at a rate of 98% compared to just over half of retail employees.
• Seniority. The length of service at a job also was a strong predictor of retirement plan involvement, with rates jumping from around 50% for those in their first year to 77% for those with over a decade on the job.
• Age. Millennials are behind the pack on retirement plan participation, and a split exist between Millennials under and over the 25 year line for age.
• Gender. The gender difference is twofold, with woman more likely to participate in their employer’s retirement plan, but men accumulating 50% more retirement savings.

See Sean Williams, 5 Critical Findings About Saving For Retirement, The Motley Fool, Dec. 27, 2014.