Retirement and financial confidence have lingered at “below average” levels since the second quarter of 2022, according to PGIM’s new PGIM RetireWell™ Confidence Index.
The new report, launched today, found that the gap between financial confidence and retirement confidence has widened dramatically since the start of 2022, which could indicate that while investors may feel relatively secure in their investments today, they worry greatly about the future.
The index notes that the 2022 dive in retirement confidence coincides with the start of one of the most turbulent years for investors, with the S&P 500 index losing approximately 19.4%—one of the worst years for equities since 2008—in addition to pressures from high inflation and interest rate hikes.
“2022 was a relatively traumatic year for investors, where both stocks and bonds experienced double-digit losses. This is incredibly rare, historically,” said David Blanchett, PGIM DC Solutions portfolio manager and head of retirement research. “If the economy keeps doing relatively well, I wouldn’t be surprised if financial confidence meets or exceeds 2021 levels at some point in 2024, but it will clearly take some time before retirement confidence returns to where it was.”
PGIM’s quarterly report provides a breakdown of retirement and financial confidence scores across age and household income levels, ranging from 0 (low confidence) to 100 (high confidence). Alarmingly, individuals between 45 and 59 years of age, those approaching retirement, had the lowest average retirement confidence score (37) among age groups. This emphasizes the importance of personalization when it comes to financial advice and retirement solutions, as age alone often doesn’t tell the full story.
“We see the PGIM RetireWell Confidence Index as a value-add for employers who want a better understanding of how American workers are thinking and feeling about retirement and their finances in general,” said Michael Miller, head of PGIM DC Solutions. “Our goal is to offer this wellness assessment more broadly, so that we can provide companies with plan-level insights to improve financial wellness over time.”
The PGIM RetireWell Confidence Index is part of PGIM RetireWell™ Solutions, a suite of tools, products and solutions developed to help defined contribution plan participants achieve better retirement outcomes through holistic advice and guidance. As of Sept. 30, 2023, PGIM had $164 billion in DC assets under management.
SEE ALSO:
• Q&A with David Blanchett: Introducing PGIM RetireWell Solutions
• One in Five Retirees Have Already Depleted Savings