Marital status, money and retirement

Transcription

1 Marital status, money and retirement A Voya Retirement Research Institute study that looks at retirement and finances for singles, married and divorced men and women.

2 Marriage and Money Singles most highly educated Love, as a concept, aspiration, goal, or state of being, is central to modern-day life in so many aspects. It s generally thought of as a good thing to love, to be in love, or to be loved. Of course, one most central ways love comes into play, in our modern society, is in romantic relationships. The quest to find the one is nearly universal. Successful romantic partnerships and relationships are strongly idealized. With respect to income, savings and retirement, there might be another benefit of a successful marriage or partnership. According to the Voya 2011 Retirement Revealed study, people who are married, or living as married, tend to demonstrate better savings behaviors, and to be more financially confident, than people who are single or divorced. Three quarters (75%) of individuals overall currently contribute to an employersponsored retirement savings plans, and marital status doesn t seem to affect plan participation overall. The same holds true for additional savings dedicated to retirement: Just over half (58%) have additional retirement savings, with little difference by marital status. The amounts saved for retirement, both within and in addition to an employer s plan, however, vary significantly, with married respondents having nearly $40,000 more in retirement savings than single respondents, and divorced respondents falling in between. Thousands $150 $100 $50 $0 $124 $50 $74 $84 $34 $50 Average age Own home 84% 50% 66% Children younger than 18 at home 40% 7% 23% Completed college or higher degree 68% 76% 59% Amount in Retirment Savings Amount in Retirement Savings Other retirement savings In employer's plan Married individuals are also more proactive retirement investors, most likely to be currently saving six percent or more of their salaries into an employer s plan, and are similarly more likely to have higher plan balances. $113 $43 $70 Married Single Divorced Contribute 6% or Employer plan Employer Plan Employer plan more to employer balance balance of balance of plan <$25,000 $75,000+ $200,000+ In this report Marriage and Money... 1 Women and Men...3 Ain t Love Grand?...6 Married 64% 35% 37% 11% Single 60% 42% 22% 6% Divorced 58% 33% 32% 9% 1 The on-line survey was conducted by ORC International (not a member of the Voya family of companies) in October, Respondents were 4,050 adults age 25-69, employed full time, with household incomes of $40, I

3 Single participants are most likely to have the lowest employer plan balances, of $25,000 or lower, consistent with their lower reported total retirement savings. Demographics help explain some but not all of the differences. Married individuals/respondents had a median age of 45.1, singles a median age of 38.1 and divorced a median age of 50. Married respondents are 8% older but have saved 48% more than singles for retirement. Divorced respondents are 11% older than married but have saved 9% less for retirement. Single respondents, overall, are least likely to practice or exhibit desirable retirement planning behaviors and attitudes on each measured dimension: Knowing how to achieve retirement goals Having a formal investment plan Working with a financial professional Calculating retirement lifestyle income needs Married and divorced respondents are similarly likely to demonstrate these good financial/retirement behaviors. Retirement Planning Behavior Retirement Planning Behavior Divorced Single Married Know to achieve re=rement goals 58% 6 66% Have a formal investment plan 28% 23% Work with financial professional 20% 30% 30% Have calculated what's needed for re=rement lifstyle 34% 43% 45% Despite the relative similarity of married and divorced respondents on these behaviors, divorce imposes additional financial disadvantages. In addition to having less saved for retirement, fewer divorcees (than either married or single respondents) have an emergency cash reserve, and for those who do, the reserve is more likely to be lower than three months salary. Emergency Financial Reserve Emergency Financial Reserve Have NO emergency financial reserve Emergency reserve of 3+ months' income 60% 56% 52% Lowest reserve amount 18% 20% 24% Most likely to have NO reserve I 02

4 Women and Men Singles are the only category in which women are more highly educated than men. Average age Own home 83% 86% 53% 47% 66% 66% Children younger 34% 45% 9% 4% 25% 20% than 18 at home Completed college 63% 72% 81% 70% 56% 62% or higher degree Introducing gender into the analysis of marital status and financial/retirement situation and behaviors widens the some of these gaps. It demonstrates that divorce can take a higher toll on women s finances, habits and confidence than on men s, and highlights how marital status can play a different role in financial and retirement situations, based on gender. Divorced women are least likely to have retirement savings outside of an employer s plan, while divorced men are equally likely as married men to have those additional savings, and more likely than single men. Single women, on the other hand, are more likely than either divorced or married women, to have other retirement savings. Have Other Have Retirement Other Savings in Addition to Employer to Employer Plan Plan 54% 62% 58% 57% 50% 62% 03 I

5 In all categories men s retirement savings, both inside and outside of an employer s plan, are significantly higher than those of women. The gap is slightly smaller for single men and women who tend be younger but still significant. Married and divorced women had roughly the same amount in total retirement savings, but divorced women are more than six years older than married women. Total Retirement Total Savings Retirement Savings Total saved for retirement Amount saved for retirement outside employer plan Thousands $140 $120 $100 $80 $60 $40 $20 $- $143 $132 $97 $58 $95 $98 $54 $40 $76 $37 $34 $32 $57 $85 $78 $58 $64 $44 Single (42%) and divorced (39%) respondents are more likely than married (34%) to feel that they don t know how to reach their retirement goals, married men are the least likely to say that they don t know how to reach their retirement goals, while single women are the most likely. While married respondents both men and women are more likely to know how to achieve retirement goals, the gender gap for married individuals (11%) is higher than for men and women who are not married (7%). Don t know how to achieve my retirement goals Don't know how to achieve my retirement goals 40% 29% 45% 38% 42% 35% I 04

6 Women and Men (Continued) Generally, married respondents are more likely to practice what are considered good retirement planning behaviors; they are more likely to work contribute the maximum to their employer s plan, to have a formal plan, to work with a financial professional, and to feel confident and on track to reach their retirement goals. With one important exception working with a financial professional men are also more likely than women to demonstrate these behaviors and confidence factors. Good Retirement Planning Behavior Feel financially prepared for retirement 46% 60% 40% 51% 41% 55% Work with financial professional 16% 29% 23% 28% Married Women Married Men Single Women Single Men Divorced Women Divorced Men Contribute maximum to employer plan 14% 13% 19% 24% 22% 27% Have a formal investment plan for retirement goals 27% 34% 22% 28% 25% Have calculated what's needed for retirement lifstyle 28% 38% 39% 39% 51% 49% Have met, or on track to meet, retirement goals 23% 27% 29% 43% 43% 05 I

7 Financial security, current and future, may be additionally (and more strongly) compromised for divorced women with respect to financial reserves, or money set aside for use in an emergency. Their reserves are lowest of all groups, and the percent reporting no emergency funds at all is highest. Emergency Financial Reserve Emergency Financial Reserve Have NO emergency financial reserve Emergency reserve of 3+ months' income 55% 64% 52% 62% Lowest reserve amount 64% 42% 21% 16% 22% 18% 33% Most likely to have no reserve 12% Ain t Love Grand? The impending changes in how we fund and experience retirement will affect all future retirees, regardless of marital status. While study data indicates that married respondents may be better prepared, with higher savings rates and amounts, and many better savings behaviors, that s not to say that that simply being married (or living as married) means that men or women are adequately prepared or preparing for retirement. Couples and individuals alike can benefit from taking steps to position themselves for financial and retirement success. These can include increasing the good behaviors identified in this study: Maximizing contributions to an employer plan, calculating retirement needs, building a formal plan to reach retirement goal and working with a financial advisor. Additional data from the Voya Retirement Research Institute demonstrates that working with a financial advisor can have clear benefits, helping to Increase employer plan participation Increase overall savings & ability to save Increase feelings of confidence and control Increase formal planning and calculating future needs Improve general financial management and health For more insights about how our various life circumstances, and emotions and psychology, can affect retirement investment behavior, visit VoyaRetirementResearch.com I 06

8 Additional copies of this report can be downloaded at the Voya Retirement Research Institute select Publications This paper has been prepared by the Voya Retirement Research Institute for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults, (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. The opinions, views and information expressed in this commentary are subject to change without notice based on market conditions and other factors. The information provided is not a recommendation to buy or sell any security. Products and services offered through the Voya Financial family of companies. Please log on to for information regarding other products and services offered through the Voya family of companies. Not all products are available in all states X.G Voya Services Company. All rights reserved. CN Voya.com