About one in five U.S. households follow five key financial wellness behaviors that allow them to save more than other households, and certain workplace retirement plan providers are standing out in helping participants get it right.
This according to a new research report released today by Hearts & Wallets, an independent research and benchmarking firm that specializes in saving, investing and financial advice.
So-called “Peak Accumulator” behaviors, first identified by Hearts & Wallets in 2010, allow households to amass far more assets than groups with less financially healthy behaviors. The research found 67% of Peak Accumulators save 10%-plus of their income, more than double the national rate of 30% for U.S. households saving 10%-plus in 2022.
Peak Accumulators have a national adoption rate of being “true” for the following behaviors in 2022:
• 66%: “My insurance needs are covered (life, home, car, health)”
• 59%: “I have little or no credit card debt”
• 54%: “I have some savings in case I lose my job”
• 51%: “I generally spend less than I make”
• 43%: “I have a retirement savings plan(s) and I contribute to it/them regularly”
“Consumers can execute on behavioral measures immediately as a way to boost their financial nest eggs,” said Laura Varas, CEO and founder of Hearts & Wallets. “Behavioral segmentations can help firms to measure progress internally and against competitors and are also an excellent way to supplement success scores in advice experiences.”
Financial wellness progress
Nationally, 19% of U.S. households do all five Peak Accumulator behaviors in 2022, up 4 percentage points from 15% in 2011. “Retirement savings” is the most difficult behavior to adopt.
Over the past decade, Americans have made the most progress on “some savings” with 54% of households setting aside some money, up 11 percentage points from 43% in 2011. Americans show progress in executing on 3 behaviors: “retirement savings,” up 7 percentage points, “insurance needs are covered,” up 6 percentage points, and “generally spend less than I make,” up 5 percentage points from 2011. “Little or no credit card debt” is basically flat from 2011.
Providers making a difference
“Workplace wellness programs position participants for successful wealth building.”
Amber Katris, Hearts & Wallets
Workplace program participant-reported financial wellness behaviors are improving steadily at Vanguard, Voya, Principal, T. Rowe Price, Empower and TIAA, the research found. Voya has the highest proportion of workplace participants who do all five Peak Accumulator behaviors at 47% among participants who know their plan providers. Vanguard was next at 39%, followed by Principal (35%). TIAA (33%), Empower (32%) and T. Rowe Price (29%) also showed gains over 2019-2020 figures, while the report said Fidelity (32%) and Charles Schwab (32%) showed declines from 2019-2020 in workplace participants who do all five Peak Accumulator behaviors.
“Workplace wellness programs position participants for successful wealth building,” said Amber Katris, Hearts & Wallets Subject Matter Expert and report co-author. “Such programs can also satisfy sponsor demand and bolster low recordkeeping margins with additional revenue streams.”
Saving up, favoring liquidity
Nationally, U.S. households are saving more. Over one in three households (37%) save $5,000-plus annually, one in five save $10,000-plus, and 8% save $20,000-plus. Consumers are upping average allocations to liquid accounts, including bank savings/certificates of deposits (CDs) and taxable brokerage.
The full report examines household saving, firm competitive data, a life insurance case study, and in-depth account allocations with looks at use of taxable brokerage accounts, employer-sponsored plans and emergency funds.
The report, “Household Finance: Quest for Liquidity, the Connection to Workplace Financial Wellness and the Current Competitive Environment,” provides a full picture of household finance. It analyzes use of saving and investing account types, household saving, life insurance coverage and financial wellness behaviors and metrics with more data fields available in Hearts & Wallets IQ Dataminer software, including household spending, debt and real estate.
The research is based on a survey of 5,993 U.S. households in the latest wave of the Hearts & Wallets Investor Quantitative Database, recognized as the largest single dataset with over 120 million data points on saving, investing and advice behaviors from 70,000 U.S. households dating back to 2010.
SEE ALSO:
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• Employers Count on Financial Wellness Programs for Retention and Satisfaction