In Practice November 16, 2006

Teachers Ahead of the Pack in Retirement Planning

Teachers as a group have better savings habits and are more likely to work with financial advisers than the general population, according to a recent study.
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According to a press release on survey findings, teachers were more likely than those in other occupations to set a savings goal for retirement (48% vs 38%), to work with a professional adviser (34% vs 19%), to save money each month for retirement (65% vs 56%), and to develop a financial plan for retirement (26% vs 13%). The study was sponsored by AIG VALIC, which provides retirement plan services to for-profit and not-for-profit education, healthcare and government organizations.

Teachers tended to be more confident in their retirement than others surveyed, with just under half (47%) saying they were “very or fairly well prepared,” compared with 37% of the general population who said so. Also, 54% of teachers say they are “financially comfortable or well-off” versus 44% of the general population.

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Nearly one-half (47%) of teachers report they are looking forward to retirement “a great deal/a lot” compared to four in 10 (39%) of the general population. They are less likely to express concern about reaching retirement savings goals and more likely to express confidence that they will accumulate enough money to fund their preferred retirement lifestyle, according to the release.

Financial Plan Equals Retirement Confidence

Those surveyed that have drafted a financial plan for retirement are more confident in their ability to plan for retirement (76%) than those who have not (35%), report a higher likelihood of reaching their retirement savings goal (52% vs. 35%), and are less likely to express concern about it (5% vs.18%).

Those who acknowledge being financially unprepared are less likely than those who feel they are financially prepared to say they look forward to retirement (27% vs. 58%), more likely to express concern about reaching retirement savings goals and securing health care coverage (43% vs. 6%), and see a greater likelihood of working in retirement (9% vs. 46%).

Other Findings

The greatest worry among those surveyed is health care costs in retirement, with 61% saying they fear it a great deal. Other findings in relation to health care are:

  • 50% are concerned about health care costs,
  • 45% say they would be willing to work a few extra years or go back to work after retirement for health care coverage,
  • 38% say they would be willing to stay at a job they did not like for health insurance coverage.

The AIG/VALIC survey results were based on interviews with nearly 2,000 US adults between the ages of 45 and 65.

Data & Research November 16, 2006

Employees Scale Back Retirement Savings To Ease Health Care Costs

Employees are concerned about the effect greater benefit costs will have on their retirement savings, a survey found.
Reported by

According to the report on results of the survey sponsored by Ameriprise Financial, 82% of workers said they were at least “somewhat concerned” about how the costs of health care and health care coverage will affect their saving for retirement, and 18% said they were “very concerned.

Sixty-eight percent of workers said they are bearing more of the weight of their health expenses, down slightly from the 71% that reported doing so in 2004 and 69% in 2003. To combat these increases, most survey respondents (61%) said they cut their discretionary spending and over a third (37%) said they may switch to a less expensive health plan, the report said.

According to the survey results, 46% of workers said they plan to or have reduced the amount they contribute to retirement savings, up from 40% in 2004 and 38% in 2003. Twenty-two percent of workers said they will cut back on other benefits they chose to pay for, compared with 27% in 2004 and 24% in 2003, and 18% of employees said they may switch to a spouse’s health plan that costs less.

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Decreases in retirement savings indicated by survey responses included:

  • a modest 1 to 2% reduction – 54%,
  • a 3% to 4% cutback – 17%, and
  • a reduction of 5% or more – 29%.

Seventy-two percent of workers said they would be interested in attending a work place financial seminar to better understand and address rising health care costs, compared to 28% who said they would not. Following health care, other employer-sponsored benefits that have seen a rise in out-of-pocket expenses include dental care, life insurance and retirement plans.

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