401(k) participants here in the States feel pretty good about their retirement prospects, at least when compared with the United Kingdom (and Ireland, but they always drink and sing sad songs).
State Street Global Advisors (SSGA) released its global retirement confidence survey, which found participants in the U.S. have the highest confidence, with more than half reporting they feel on track to meet their retirement goals.
Confidence is lower in Ireland and the UK, with confidence at 22 percent and 36 percent respectively.
SSGA introduced a financial wellness index to the survey this year, which it said will “assess a broader picture of a participant’s financial life,” including financial resources, debt, stress and their ability to deal with emergencies.
“The good news is that employees’ confidence in their ability to retire remains higher than a few years ago,” Fredrik Axsater, global head of SSGA Defined Contribution, said in a statement.
“However, we believe it is important to look beyond reported confidence and have a broader understanding about how employees feel today about their financial lives. In fact, the wellness index scores appear to be a more powerful driver of behavior than one’s financial literacy.”
Tracking with their confidence, U.S. participants report greater financial wellness scores, with 46 percent showing high financial wellness, compared to 33 percent of respondents in the UK and 13 percent of respondents in Ireland.
Other findings include:
- The majority of participants feel more financially stable: The majority of US and UK respondents feel more financially stable; however, employees in Ireland feel less in control and sometimes run low on money.
- I rarely or never need to borrow money to make ends meet (75% US, 70%UK, 56% Ireland)
- I can afford a good standard of living for my family (75% US, 72% UK, 54% Ireland)
- I am saving enough for my retirement (52% US, 45% UK, 28% Ireland)
- I don’t feel like I’m in control of my financial situation (16% US, 16% UK, 25% Ireland)
- I don’t feel secure with my employment at my existing firm (15% US, 21% UK, 29% Ireland)
- I sometimes run low on money to spend on basic necessities (15% US, 15% UK, 25% Ireland)
- I have an unmanageable amount of debt compared to income (14% US, 9% UK, 17% Ireland)
- I often have trouble paying my monthly mortgage or rent (7% US, 6% UK, 15% Ireland)
- I rarely or never need to borrow money to make ends meet (75% US, 70%UK, 56% Ireland)
- I can afford a good standard of living for my family (75% US, 72% UK, 54% Ireland)
- I am saving enough for my retirement (52% US, 45% UK, 28% Ireland)
- I don’t feel like I’m in control of my financial situation (16% US, 16% UK, 25% Ireland)
- I don’t feel secure with my employment at my existing firm (15% US, 21% UK, 29% Ireland)
- I sometimes run low on money to spend on basic necessities (15% US, 15% UK, 25% Ireland)
- I have an unmanageable amount of debt compared to income (14% US, 9% UK, 17% Ireland)
- I often have trouble paying my monthly mortgage or rent (7% US, 6% UK, 15% Ireland)
- US participants are the most satisfied with employer involvement: while all countries showed improvement over 2015 levels, more than half (56 percent) of US respondents are satisfied. Ireland made the greatest stride over the past year, with a 12 percent increase in satisfaction versus 2015.
- Financial literacy lags: the survey respondents were also tested on their financial literacy based on a widely-accepted quiz comprised of eight basic financial questions. In the US only half got 7-8 questions correct and in the UK and Ireland, the scores were lower 39 percent and 20 percent respectively.
“Employers should view increased satisfaction and stronger financial stability as a sign that retirement readiness is improving,” Axsater concluded.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
