Jo Turner, Ph.D., CFP, Family and Consumer Economics
Summary
The United States and even the world are concerned about retirement resources for future generations. The effort to revamp the Social Security program is one example of this concern. Other examples include employers who have spent the retiree’s retirement to pad their on pockets or trying to stay out of bankruptcy.
The literature shows that employers who match employee contributions have more employees participating in the retirement savings program than employees participating in programs where employers who don’t provide for matching contributions. The authors of this research sought to develop a model of factors that influenced savings behavior and to find out (1) what factors were related to an individual having a retirement savings program and (2) the relationship between having a retirement savings program and confidence about their retirement.
Findings
Model:
| Environmental Influences Household Size (-) | ||
| Individual Differences Higher than college degree (+) Income over $50,000 (+) | HAVING A RETIREMENT SAVINGS PROGRAM | Psychological Processes Employer Education (+) Financial Behaviors and Attitudes (+) Pessimistic Retirement Attitude (-) |
| Outcome Retirement Confidence |
42.7% of the sample had in the previous 12 months received employer provided financial education. Employees who had financial education at the work site were more likely than those who had not received this information to have a retirement savings plan. In fact, the odds of have a retirement savings plan increased three fold with employer provided education. . The individual’s financial confidence correlated to education at the worksite.
As the size of the household increased, the less likely the parents were to have a retirement savings plan.
Respondents with $50,000 or more annual income were more likely to have a retirement savings plan.
Respondents with higher education were more likely to have a retirement savings plan.
When accounting for income and family size, there was no difference between ethnic groups.
Few employers provided financial education at the work place, but those who did found that the payoffs were greater than the costs.
Implications for Extension Programming
Early in 2006, a multistate project will be launched to teach young employees 18-24 the importance of saving for the future and retirement. This research can be used to introduce employers to the project and encourage them to participate in the project by cosponsoring with the Florida Cooperative Extension Service a series of lessons at the worksite. The employer can provide space, refreshments, and even time for the employee to receive the instructions. The employer can display posters and even put a brochure in the pay envelope of the employee.
1 A study by So-Hyun Joo and John E. Grable in the Journal of the Association of Financial Counseling and Planning Education. Volume 16 (1), 2005.
Labels: RNYCU
