US Participants Report a 30 Percent Increase in Confidence since 2013

State Street Global Advisors (SSGA), the asset management business of State Street Corporation (NYSE:STT), today released the findings of its annual global retirement survey. The survey found that despite having higher investable assets and considerably higher contribution rates than Americans, Australians have notably lower confidence in their ability to meet retirement goals than their American counterparts. The survey polled more than 3,600 retirement savers across the US, UK, Ireland and Australia.

The survey found that US plan participant confidence is influenced by a number of factors, including:

  • Being knowledgeable about how to plan and set goals (54%).
  • Having retirement planning tools like savings checklists and online planning tools (45%).
  • Understanding how to “invest appropriately.” However, there was a significant gap between those who report having invested appropriately (66 %) as a top reason and those who feel knowledgeable about investing (36%) as a top reason.

Surprisingly, despite having larger average savings balances than their US counterparts, Australian respondents were less confident about meeting retirement goals. While Australian respondents earned 38 percent less than US respondents, they saved 41 percent more on average. US Participants who aren’t confident cite having not saved enough (80 percent) and having other financial priorities (44 percent) as the contributing factors.

“The Australian paradox debunks the widely held belief that confidence is driven by the balance in a retirement portfolio savings account,” said Fredrik Axsater, global head of SSGA Defined Contribution. “Both plan sponsors and participants need to consider other factors when assessing confidence, such as culture, the state of the economy, pending legislation, plan design and individual circumstances. It is important that we move away from a singular view of confidence to a broader view of the financial life of people.”

“Additionally, recent market events may have impacted participants’ short-term confidence levels,” said Nigel Aston, head of SSGA’s DC business in Europe. “These findings and those recent events reinforce that participants benefit from consistent engagement from plan sponsors to help them remain focused on long term retirement goals.”

The following are best practices US plan sponsors can follow to help influence confidence among plan participants:

  • Setting bolder default contribution rates: if you don’t use auto-enrollment, make implementing it a top priority. In addition, consider setting higher default contribution rates, closer to 10%, for your plan.
  • Review your company match: employer match can play a role in encouraging higher savings. For example, rather than matching dollar per dollar up to 6%, consider matching 50 cents on the dollar up to 12%. This signals to employees that the optimum contribution is 12%.
  • Add or expand financial wellness programs: helping employees with financial basics such as budgeting may help boost retirement savings rates. In addition, simply talking about financial topics with their peers can encourage employees to take action.

This survey was conducted in partnership with TRC Market Research and Rice Warner. Data were collected in May 2015 through a 12-minute Internet survey using a panel of 3,652 retirement savers, aged 22 to 81, who were working at least part-time and participated in retirement savings plans, either with or without the guidance of a financial advisor.

The SSGA Global Retirement Survey Report can be viewed here.

The SSGA Summer/Fall 2015 Participant magazine can be viewed here.

About State Street Global Advisors

For nearly four decades, State Street Global Advisors has been committed to helping our clients, and those who rely on them, achieve financial security. We partner with many of the world’s largest, most sophisticated investors and financial intermediaries to help them reach their goals through a rigorous, research-driven investment process spanning both indexing and active disciplines. With trillions* in assets, our scale and global reach offer clients unrivaled access to markets, geographies and asset classes, and allow us to deliver thoughtful insights and innovative solutions.

State Street Global Advisors is the investment management arm of State Street Corporation.

*Assets under management were $2.4 trillion as of June 30, 2015. Assets under management include approximately $26.7 billion as of June 30, 2015), for which State Street Global Markets, LLC, an affiliate of SSgA, serves as the distribution agent.

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State Street CorporationAndrew Hopkins, +1-617-664-2422Ahopkins2@statestreet.com

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