Fidelity® Study Finds Older Higher Ed Faculty Confident in Their Retirement Savings, but Few Have Taken Action to Plan Income Strategy

Three-Quarters of Higher Ed Faculty Age 55+ Recognize a Need for Financial Guidance, yet only 17% Have a Retirement Income Plan

BOSTON – Fidelity Investments®, a leading provider of workplace retirement plans in the not-for-profit higher education market, today released the latest findings from its Higher Education Faculty Studyi, revealing that while eight in 10 (82 percent) pre-retiree faculty members (age 55+) are confident they will have enough money to live comfortably in retirement, only 17 percent have taken action to create a retirement income plan. This lack of planning could result in faculty members nearing the common retirement age of 65 being less inclined to retire, as well as unprepared for long-term expenses and turning their assets into regular income. The promising news: They recognize the need for guidance.

Majority of Older Faculty in Need of Retirement Guidance
Fidelity finds that three-quarters (75 percent) of pre-retiree faculty report needing some form of financial guidance. They are asking for help in developing a retirement income plan (31 percent), choosing specific investments (36 percent) and assessing an overall financial plan (30 percent).

“Having confidence in their retirement savings may result in faculty members who are approaching retirement age not taking the time to create a retirement income plan, leaving them without a strategy to convert savings into lasting income,” said Rick Mitchell, executive vice president, Tax-Exempt Retirement Services, Fidelity Investments. “It’s critical that pre-retirees understand how long-term savings can be transitioned into retirement income. Higher education employees value education and the opportunity to learn, so it’s no surprise that they are asking for help.”

Employees of all ages should have an investment plan in place and while older faculty are nearly twice as likely to have a formal investment plan than a retirement income plan, there is still a need to increase the number of faculty who have both plans. Similarly, younger faculty (age 54 and under) are also falling short in this area, with only 17 percent having a formal investment plan in place. Not surprisingly, 61 percent of younger faculty report they often worry about their financial situation.

When it comes to getting help from financial professionals, older faculty are more likely than their younger colleagues to rely on guidance from an advisor or an investment center representative (59 percent versus 37 percent). In fact, 47 percent of pre-retiree faculty report working with a financial advisor, compared to just 29 percent of their colleagues under age 55.

All Generations Must Consider Long-Term Planning
When considering future medical expenses, such as day-to-day health care, the study finds that 81 percent of older faculty are confident they can cover these costs. However, when it comes to planning for long-term care expenses – such as those associated with assisted living – pre-retiree faculty have less confidence, with only 54 percent confident they will have enough money to pay for them. On the flip side, younger faculty are more focused on short-term expenses, such as paying daily living expenses (26 percent), than they are about long-term financial goals, like saving for retirement (21 percent). As it relates to other long-term planning, only 52 percent of younger faculty are confident they can pay for future medical expenses.

There’s an expectation among pre-retiree faculty that long-term health care benefits will be provided by their employer. In fact, 72 percent say it’s important for an institution-sponsored faculty retirement program to include retiree health care benefits. Of the older faculty members who currently have an institution-sponsored retirement incentive program, 60 percent think it’s important to the health of their institution, and 83 percent agree they would appreciate it if their institution offers assistance for the transition to retirement. Compared to their older peers, an even greater number of younger faculty (84 percent) report that retiree health care benefits are the most important feature for an institution-sponsored retirement program.

“Younger higher education employees are less likely to have access to fully funded, employer-sponsored retiree medical benefits, as well as pension benefits,” said Mitchell. “It’s critical for employees of all ages to address their retirement readiness by preparing now for the financial demands they may experience in retirement. While older faculty members are approaching retirement sooner, financial planning needs to be top of mind for younger faculty too.”

Retirement Planning Tools and Resources for Higher Education Employees
To address retirement readiness, Fidelity offers Retirement Transition Services, a new offering within its Plan for Life participant experience, to help pre-retiree employees address complex health and wealth decisions such as: how to create a lasting retirement income and how to find and pay for quality health care coverage. Plan for Life helps employees at all career stages address topics that matter most to them.

Fidelity’s wide variety of resources to help higher education employees plan and save for retirement include:

• Access to investment professionals on-site at the workplace, by phone, online or at 182 Investor Centers nationwide.

• Comprehensive guidance on retirement and personal savings options.

• Planning tools and savings calculators to help employees invest, manage assets and achieve retirement readiness:

oRetirement Income Planner: For employees within five years of retirement, this planning tool will help create a comprehensive plan to make finances last.

o Retirement Quick Check: For those employees more than five years from retirement, this quick check creates a snapshot of retirement savings progress and offers suggestions to reach those goals.

• A short video “Creating a Retirement Income Plan” designed to encourage older higher education employees to create a plan to answer important questions: Can you afford to retire? Will you be able to maintain your lifestyle? How long will your money last? And two additional videos encourage higher education employees to take action to save and choose investments.

• Fidelity Viewpoints, a series of timely articles that provide analysis of important finance topics. Specifically, “How to Tame Retiree Healthcare Costs” outlines steps to take for effectively planning for health care expenses in retirement, and “Smart Strategies for Retirement Income,” outlines how a mix of investments can help provide income and growth potential in retirement.

• Workshops, educational articles, webcasts and online resources about retirement planning.

Fidelity’s Services for the Tax-Exempt Market
Fidelity is the leading retirement plan provider for the not-for-profit health care market and the second largest provider in higher education. Fidelity serves more than 4 million plan participants in more than 2,000 workplace savings plans across the not-for-profit market, including health care, higher education, research, foundations, faith-based, K-12, and other not-for-profit organizations.

Fidelity’s comprehensive suite of 403(b) retirement services includes plan design resources, recordkeeping services, consulting and participant communication, education and guidance. With retirement planning professionals, and a wide array of tools and resources available to educate plan sponsors, Fidelity helps employers in the tax-exempt market maximize their retirement benefits plans and increase employee retirement readiness.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.2 trillion, including managed assets of $1.8 trillion, as of August 31, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

i Survey was conducted by Versta Research, an independent firm based in Chicago, between February 21 and March 6, 2013, among 909 benefits-eligible employees in the United States, including 608 who work at colleges or universities. Respondents were screened for current employment status, benefits eligibility and for having at least some involvement in household investment decision-making. The higher education sample included 224 employees at private institutions and 384 employees at public institutions, of whom 103 were employed at two-year institutions and 505 were employed at four-year institutions. Data were weighted on both these dimensions to reflect the current population of employees according to 2011 data from the U.S. Department of Labor. Versta Research is not affiliated with Fidelity Investments.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Guidance provided by Fidelity is educational in nature, is not individualized and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions.

IMPORTANT: The projections or other information generated by Fidelity’s Retirement Income Planning Tool and Retirement Quick Check regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.

Retirement Income Planner and Retirement Quick Check are educational tools.

Fidelity Investments and Fidelity are registered service marks of FMR LLC.

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