High Anxiety: MassMutual Survey Shows Active Savers Are Most Worried about Retirement

A high saver—one who sets aside at least 8 percent of his salary into a 401(k) savings plan—doesn’t have the confidence to match that savings rate.

That’s one of the startling findings from research conducted by Massachusetts Mutual Life Insurance Company. The survey polled more than 17,000 people participating in roughly 2,300 employer-sponsored retirement savings plans administered by MassMutual’s Retirement Services Division.

Not only do high savers have lower confidence about their retirement plan, the survey also showed that those who are more active in managing their retirement savings (79 percent) are more eager for help and information about investments and investing, compared with those who are less active (47 percent). One obvious remedy is to get these high-saving, low-confidence investors teamed with a financial professional, according to retirement experts at MassMutual, who can hook them up with the right products.

“Rather than just track what people are actually doing in terms of retirement savings, we are also deeply interested in the ‘why,’” explained Ian Sheridan, corporate vice president and chief marketing officer for MassMutual’s Retirement Services Division. “Our research shows that what individuals say and what they actually do are at times explicitly different. This study will help us better understand the savings mind-set of individuals
to better provide them the information, resources, and products they need to feel confident about their retirement future.”

Researchers categorized the participants in the survey as low, medium, and high savers based on their yearly deferral rates of salary into a 401(k) savings plan. Low savers put aside less than 4 percent, medium savers between 4 and 7.99, and high savers at least 8 percent of their salaries. Those with the highest deferral rates said they enjoy managing their finances (57 percent) more than the low and medium savers (49 percent). Still, those who take an active role in saving and making investment decisions lack confidence about their investment decisions and their financial security as retirement nears.

For example, only 44 percent of high savers expressed confidence when making their investment decisions, compared with 54 percent of low and medium savers. In addition, high savers are more concerned that they won’t have enough saved for retirement (44 percent) compared with just 32 percent of low and medium savers.

“The lesson is that some of the traditional assumptions about investment confidence, like deferral rates and active investment decisions, may indicate the exact opposite,” Sheridan said. “We cannot assume that someone who saves aggressively and actively manages those savings is confident or secure in their financial situation. Working with a financial professional can help these high savers better understand their position and make them more comfortable and confident in their retirement prospects.

“Likewise,” Sheridan continued, “we have to continue to find ways to encourage those low and medium savers that it is never too late to start saving more.”