In Retirement Planning, Knowledge Doesn’t Always Lead to Action

Retirees showed the same kind of overconfidence that plagued the worker group. The report found 82% are at least somewhat confident about their level of comfort in retirement, but of the two-thirds who expect to live longer than 20 years in retirement, only 40% think their savings will last that long.  

And while they recognize the importance of creating a holistic plan (73%), just over a quarter have a formal written plan and 35% have a written budget.

As you would expect, retirees had more saved than workers. Forty-six percent had between $150,000 and $1.5 million, but 21% didn't even have $49,000 saved. Thirteen percent weren't sure how much they had saved.

Role Models

Individuals who scored a seven or higher on Voya's index were considered "role models." Role models in the worker group were more likely than their peers to own several different kinds of products and considered their workplace plan a "major source of income in retirement."

They were four times as likely than their lowest scoring peers to have given a "great deal" of thought to retirement issues like savings goals (70% versus 16%), whether those goals will meet their needs (68% versus 13%), the cost of health care in retirement (66% versus 14%) and the age at which they wanted to retire (59% versus 14%).

Over half of these worker role models (56%) had a relationship with a financial professional, the study found, and they were very active in managing their investments, with most rebalancing assets at least once a year.

Retiree role models scored a little higher than worker role models — 7.4 to workers' seven. While they were still working, these high-scoring respondents almost universally started saving early, maintained a holistic financial plan and kept an eye on their future monthly income based on what they were making at the time. Eighty-seven percent said they worked with an advisor they chose, and 77% said they used an advisor through their workplace.

Startlingly, 60% of the lowest scoring retirees said they never purchased any insurance or investment products. Almost half said they never planned for health or long-term care issues, and 40% said they didn't plan for income in retirement.

The report noted that employers are essential to retirement readiness. Many of the respondents in both groups were better prepared because of the support they received from their employers through calculators, and planning and budgeting tools.

"Individuals must understand the importance of saving as soon as they enter the work force and they should treat it as a financial priority throughout their working lives so they have enough at retirement," the report says.

— Check out 10 Best States for Retirement: 2015 on ThinkAdvisor.