Financial Wellness: Redefining the Path to Retirement Success

Better Outcomes for All Investors

In our latest survey of 401(k) participants, we found that financial wellness is imperative to address social inequity, the prioritization of competing financial goals, and long-term retiree success.

Helping Savers Stay Focused on Retirement

Financial wellness can help with prioritizing competing financial goals.

 
 

Through the Lens of Race and Ethnicity

Employers have an opportunity to promote diversity, equity, and inclusion in defined contribution plans and help address broader social inequality.

Financial Wellness in Retirement

Employers can help plan participants navigate retirement planning, while also supporting retirees as they face new financial decisions.

De-Stressing the Retirement Journey

Day-to-day financial stress can have a profoundly negative impact on eventual retirement outcomes. Get research-backed tools for addressing this barrier within the plans you serve.

Helping Savers Stay Focused on Retirement

Financial wellness can help with prioritizing competing financial goals.

Key Insights

  • Savers today struggle with making the connection between their current financial choices and secure retirements.
     
  • Confidence about retirement declines as retirement approaches.
     
  • Reinforcing the value of positive financial actions taken today will improve confidence and retirement outcomes.

Hypothetical Lifestage Financial Goals of Workers

Priorities that compete with retirement for today's dollars.

Student Loans, Education, Purchase Residence, Repay Mortgage, Save for Retirement

Source: T. Rowe Price.
Hypothetical timeline of debt repayment and savings goals.

Financial Wellness Through the Lens of Race and Ethnicity

Employers have an opportunity to promote diversity, equity, and inclusion in defined contribution plans and help address broader social inequality.

Key Insights

  • Societal inequality found in the broader labor market is also present in retirement savings.
     
  • Black and Latinx retirement savers are more likely to have debt and less likely to own homes than white savers.
     
  • Defined contribution (DC) plans such as 401(k)s are one of the few places where access to advice, guidance, and education in support of lifetime financial goals is supported equally.

Among those who have access to 401(k)s, 81% of the heads of white households participate in a DC plan compared with 70% of Black and 63% of Latinx heads of households.

Bar chart: 81% 70%, 63%

Financial Wellness in Retirement

Employers can help plan participants navigate retirement planning, while also supporting retirees as they face new financial decisions.

Key Insights

  • Discussions of financial wellness have often focused on retirement planning; however, financial wellness also matters in retirement.
     
  • Retirees may still need guidance in making the right financial choices as they pivot from a saving to a spending mindset.
     
  • Retirees are more confident about their finances in retirement than preretirees.

Financial Stress and Financial Wellness

Helping workers address financial stress today can help boost the effectiveness of retirement plans.

Key Insights

  • Targeted communications can encourage workers to take financially healthy actions. 
     
  • Promote programs and tools that help employees with budgeting.
     
  • Offer measurement and assessment tools that reinforce healthy behaviors and their connection to successful retirement outcomes.

Financial Wellness in Retirement

The Retirement Savings and Spending Study was conducted by NMG Consulting on behalf of T. Rowe Price and included a sample of 3,420 401(k) retirement plan participants, 631 participants not eligible to participate in a 401(k) plan, and 1,007 retirees with a Rollover IRA or left-in-plan balance. The survey was fielded online from June 5 to June 24, 2020.

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