Will Public Sector Retirement Problems Point to 401ks?

One in four say pension 'significantly influenced' decision to pursue public sector career

401k, defined benefits, pensionsIs the jar almost empty?

Are 401ks the answer?

An overreliance on public-pension promises has many government employees on shaky retirement ground, as states and municipalities seek to avoid fiscal fiascos in the wake of spending constraints.

According to a new survey from Prudential Retirement titled Getting Back on Track: Financial Wellness in the Public Sector, only 17 percent of public sector employees are “very confident” they will not run out of money in retirement, with even fewer certain they will be able to cover all of their medical expenses.

At the same time, more than one in four say a pension plan “significantly influenced” their decision to pursue a career in the public service sector, raising questions about how states and municipalities forced to cut back pensions will attract talent in the future.

“Those who devote their lives to public service deserve a secure future,” Scott Boyd, Head of Tax-Exempt Markets for Prudential Retirement, said in a statement. “Our survey highlights the need for the public sector to offer financial wellness solutions that address the retirement security issues of their workers. We will work with them to help make it happen.”

Key survey insights: America’s public-sector workers need more financial security

  • Public employees are plagued by doubts about retirement.
    • Only 17 percent are “very confident” they will have enough money to last them through retirement.
    • Less than a third have enough savings to cover surprise expenses.
  • Pensions play a key role in choosing a public service career.
    • Only 33 percent say pensions didn’t influence their decision.
    • Nearly half say a pension at risk would impact their commitment to staying in public service.
  • Public employees are not more financially savvy than anyone else.
    • Less than one in three feel very confident making retirement decisions.
    • Only 18 percent feel very confident about investing.
  • Those with advisors are more diversified and confident about the future.
    • 46 percent of those with financial advisors are comfortable with their retirement finances; only 33 percent are comfortable without one.
    • Those with a financial advisor are more than twice as likely to have an investment account than those without one.
  • About half of respondents don’t expect they will be able to change saving and spending habits to achieve their financial goals.

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