BALTIMORE, Aug. 24, 2021 /PRNewswire/ -- T.
Rowe Price, a global investment
management firm and a leader in retirement, today released a series
of white papers featuring findings from its sixth annual Retirement
Savings and Spending survey focused on the financial attitudes
and behaviors of 401(k) savers and retirees. Among the notable
findings, the research found that Black and Latinx 401(k) savings
rates are lower compared to their white counterparts. The median
deferral rates were 5% and 8% for Black and Latinx participants,
respectively, compared to 9% for white participants. Additionally,
Black and Latinx respondents were more likely to cite having
student loan, medical, and other types of debt, further impairing
their ability to save for retirement.
DC plans, such as 401(k)s, are one of the few places where
access to financial advice, guidance, and education in support of
lifetime financial goals is supported equally. This provides plan
sponsors with a unique opportunity to directly address plan
participation and savings gaps through the availability of
financial wellness tools and services and better plan design.
The first step for employers may be as simple as seeking input
from underrepresented minority employees about what would be
helpful to improve financial wellness. Additionally, employers
could also incorporate plan designs that prioritize participation,
such as automatic enrollment, auto increase, or using incentives,
such as matching employer contributions to increase contribution
rates.
"Employers have an opportunity to promote diversity, equity, and
inclusion in defined contribution plans and help address broader
social inequality," said Dee Sawyer,
head of Individual Investors and Retirement Plan Services at T.
Rowe Price. "Better understanding
the challenges underrepresented groups face can help employers and
financial professionals develop strategies to help ensure
participants of all races and ethnicities thrive financially and
retire successfully."
Additional findings from the research include:
- Fifty-five percent of survey respondents believe, despite
inadequate levels of saving, they are saving enough to enjoy a
comfortable retirement. The remaining 45% are either aware they are
not saving enough or are unsure if their retirement plan
contributions are sufficient.
- Confidence about finances in retirement declines as retirement
approaches, but retirees have fewer financial worries compared with
those who are working. For example, 61% of retirees believe they'll
have enough money to pay for health care during retirement, while
only 39% of working baby boomers have that belief. Similarly, 47%
of retirees believe they will live as well or better than when they
were working, while only 38% of baby boomers have that belief.
- Twenty-seven percent of the retirees surveyed are working in
retirement or looking for work, with many doing so by choice, not
out of necessity: 49% are working for meaning and fulfillment, 41% enjoy the mental
stimulation, and 35% are working for social engagement.
- Forty-three percent of retirees reported receiving advice from
a financial professional, with most (61%) reporting that they did
their retirement planning on their own or with their spouse. This
indicates that the need for help with financial wellness does not
end at retirement. With retirees facing new priorities and needs in
retirement and some even continuing to work, retirees need guidance
as they shift from a saving mindset to a spending mindset.
"Both pre retirees and current retirees can benefit from
financial wellness programs," said
Josh Dietch, vice president,
retirement thought leadership at T. Rowe
Price. "Reinforcing the
value of positive financial actions, no matter where an individual
is on the retirement savings journey, can help improve confidence
and outcomes."
ABOUT THE SURVEY
The Retirement Savings and Spending
survey was conducted by NMG Consulting on behalf of T. Rowe Price and included a sample of 3,420 401(k)
retirement plan participants, 631 participants not eligible to
participate in a 401(k) plan, and 1,007 retirees with a rollover
IRA or left-in-plan balance. The survey was fielded online
June 5th through
June 24th, 2020. This is
the sixth edition of the study, following the 2014, 2015, 2017,
2018, and 2019 installments. The three phases of the 2018 study
focused on financial advice, retirees, and gender and the phases of
the 2019 study focused on retirement confidence and retirement
income. Data from prior studies is used in this report for
comparison purposes.
ABOUT T. ROWE
PRICE
Founded in 1937, T. Rowe Price (NASDAQ-GS: TROW) is an independent
global asset management company with $1.62
trillion in assets under management as of July 31, 2021. The firm is focused on delivering
investment excellence and retirement services for institutional,
intermediary, and individual investors. Our strategic investing
approach, driven by independent thinking and guided by rigorous
research, helps clients feel confident in pursuing financial goals.
For more information, visit troweprice.com, Twitter,
YouTube, LinkedIn, Instagram, or
Facebook.
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SOURCE T. Rowe Price Group, Inc.