What Employees Have to Say about Retirement...Men are more prone to overconfidence bias. 37% or...

What Employees Have to Say about Retirement

1 - What Employees Have to Say


Why did we ask?

Limited data regarding Puerto Rico participants of retirement plans.

Need to understand how participants feel about their retirement planning.

Better understanding ofPuerto Rico data will help plan sponsors develop additional products and services that allow participants reach retirement goals.


Study conducted to gain insight from Popular Retirement Plan participants.

Information gathered through an email survey with 31 questions about participant retirement planning, perception and demographics.

Survey was sent to approx. 32,000 retirement plan participants.

Response rate was 3% with 971 effective interviews received, of which 631 were women and 340 were men.

Methodology


What did we ask?

Behavior

How and if participants are actively saving

What products they use

If they have previously sought help on planning

How confident they are about reaching retirement goal


What did we ask?

Social Demographics

Age, Gender, Industry, Region, Work Status, Household Composition

Retirement Knowledge

Tools used for information

How knowledgeable participants feel

Progress tracking

Topics of interest within retirement

9 - TRUSTEE WORKFLOW

Main Findings


Main Findings

67% of plan participants say they are actively saving for retirement, but 53% lacks an emergency fund

52% have started to evaluate their retirement needs

79% have not completed a financial plan but feel they need to

Half of participants state that their contributions to retirement plan have at least stayed the same vs a year ago

73% of participants do not feel confident about meeting retirement goals and 80% do not think Social Security benefits will be enough

Almost half follow retirement goals through Popular’s webpage


Main Findings

Men are more prone to overconfidence bias.

37% or participants feel Professional Advicewould help them plan for retirement.

Education continues to be key on helping on these topics.

71% of men feel confident of meeting retirement goals while only 36% of women feel the same way.

Over 75% of men feel they know the right course of action and have the financial knowledge to apply such. Women do not feel as confident as men.


Surprising Findings


Surprises

41% of the respondents do not perceive their 401(k) plan as an active retirement savings tool

100% of the respondents are participants in your 401(k) plans…

41% 100%


Not so surprising…

Younger participants feel uninformed and unprepared about retirement. Only 17% of

participants between 18-34 feel qualified in financial knowledge; 15% are confident about

meeting retirement goals.


Not so surprising…

58% of married participants feel qualified in financial knowledge and 75% are aware of

actions needed before retirement.

Divorced participants show similar trends to married

participants.


Confident?

of respondents indicated they are confident in meeting their retirement goal

of the respondents feel social security benefits will not be enough to retire on

27%

80%


Emergency Fundsvs. Retirement

Capital

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66%

33%

Social Security has become one of the biggest source of income for retirees, despite program’sproblems.

Represents the only source of income for 20% of current retirees.

Social Security as source of income for retirees

Represents 50% or more of income

Represents 90% or more of income


Prepared for financial emergencies

53% of the respondents indicated they do not have an emergency fund

Did María teach us anything?

Let’s go to the numbers


Emergency fund

Let’s go to the numbers

1% coming in or going out?

How much should the emergency fund be?

3 – 6 months of COL

Ex: COL = $3,500/mo x 3 = $10,500 (or $21,000)


María Effect

Tax Law allowed withdrawal of

$10,000

What did that do to your retirement capital?


Takeaways for HR


Friendly reminder

Correlations do not indicate causation


What does it mean?

What people think they know is important.

What should you do?

Provide them with financial education on a continuous basis across different sources of a formal communications program. Bring the level of objective financial knowledge up to the level of subjective financial knowledge.


What does it mean?

Confidence is an important component of subjective knowledge

What should you do?

Publish short term messages regarding the 401(k) plan on different topics acrossdifferent sources of a formal communications program. Help people increaseconfidence.


What does it mean?

People need help understanding the steps to take for retirement

What should you do?

Teach them the steps to prepare for retirement, by age group.


How can Popular help?

• Popular Fiduciary Services educational team

• Popular @ Work

• Wealth Management, Retirement Specialist

• Tailored presentations to clients


What is the Message?

Information is good and needs understanding

Understanding is good and needs action

Action is good and needs monitoring

Monitoring is good and needs action


Deliver the Message

Teach it.

Show it.

Live it.

Talk about it.

Make it part of your company culture.

It’s not a campaign message, it’s your life.

What Employees Have to Say about Retirement...Men are more prone to overconfidence bias. 37% or...

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