Retirement Savings Rates Not at Recommended Levels for Gen X and Gen Y Nurses, Though Boomers on a Better Path to Retirement ReadinessBOSTON — Fidelity Investments®, the leading provider of not-for-profit workplace retirement plans for the health care industry, today announced findings from its third Nurses Retirement Study that show as the U.S. economy has continued to improve, so have nurses’ retirement savings. One-quarter (26 percent) of nurses with a workplace retirement savings plan have now accumulated more than $100,000 in assets, up from 18 percent in 2011 when the economy was still recovering from the financial crisis.
However, for those participating in their workplace plans, savings rates are still less than optimal, especially among younger generations. In fact, nearly two-thirds of nurses (62 percent) acknowledge they are not saving enough for retirement. Gen Y (born 1979-1995) and Gen X (born 1965-1978) nurses are saving a median of 5 percent and 6 percent respectively. However, Boomer nurses (born 1946-1964) are on a better track, saving nearly twice as much as their colleagues at 10 percent.
Fidelity recommends employees have a total savings rate of 10-15 percent of their salaries from both employer and employee sources. Even with employer contributions, many Gen Y and Gen X nurses likely do not have a total savings rate in the recommended range.
Not surprisingly, given their shortfall in savings rates, Gen X nurses (55 percent) and Gen Y nurses (48 percent) are not confident they will have enough money to retire, compared to 35 percent of Boomers. Furthermore, 76 percent of Gen X nurses are concerned they will never be able to retire, compared to 53 percent of Boomers.
“We’re encouraged that many Boomer nurses are saving 10 percent of their salaries for retirement, but it’s also concerning that this is almost double the rate of their younger colleagues who are currently lagging in savings,” said Rick Mitchell, executive vice president, Tax-Exempt Retirement Services, Fidelity Investments. “To help improve retirement readiness, nurses of all generations should consider increasing retirement saving rates, and implement an age-appropriate asset allocation strategy. Especially for younger nurses who are less likely to rely on Social Security and pension plans, even small increases in contributions can make a huge impact in long-term savings.”
Nurses Concerned with Industry, Government Changes
Health care institutions continue to be affected by changes within their industry, causing many nurses to worry how these shifts may impact their financial future. For example:
• Increased mergers and acquisitions (M&A) lead to diminished optimism: Increasingly in the last decade, large health care organizations have acquired smaller institutions, and 42 percent of the nurses surveyed experienced a consolidation in the past three years, up from 29 percent in 2011. Of nurses who have been through a consolidation, 37 percent report that the merger has negatively impacted morale, and one-third (33 percent) report there is more stress on the job.
• Decreased access to defined benefit plans: Just as reliance on Social Security decreased, so has access to defined benefit (DB) plans. Thirty-nine percent of nurses report having a DB plan – down from 48 percent in 2011. Among Boomer nurses, 44 percent have access to a DB plan.
• Younger nurses are less reliant on Social Security: Only 19 percent of nurses expect Social Security to be their primary source of retirement income, and the expectation is even lower among younger generations: 8 percent for Gen Y and 16 percent for Gen X. Given these attitudes, workplace retirement savings plans are increasingly critical: 43 percent of all nurses report these savings will be their primary source of retirement income.
Nurses Overwhelmed by Retirement Planning, Want Help
More than half of nurses (53 percent) feel overwhelmed by retirement planning, and 79 percent want more help. For help with retirement planning, nurses rely on their workplace retirement plan providers, and find the following most helpful: in-person meetings (56 percent), mailed materials (42 percent), telephone consultations (34 percent).
To help nurses plan and save for retirement, Fidelity offers a variety of free resources:
• Workshops, educational articles and other online resources including the “Caring for Nurses’ Finances” webinar, which provides strategies to help reach retirement goals.
• Fidelity Viewpoints’ Special Report: Retirement Roadmap, a series of articles addressing some of the most pressing questions being raised about retirement.
• Retirement planning tools and savings calculators to help employees invest, manage assets and achieve retirement readiness.
• Access to investment professionals offering free one-on-one guidance on retirement savings options on site at the workplace, by phone, or at 183 Investor Centers nationwide.
Fidelity’s Services for the Tax-Exempt Market
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 the Fidelity Investments Nurses Retirement Study
Versta Research, an independent research firm, conducted the online study on behalf of Fidelity Investments® from August 5 – 18, 2013. The survey included a national sample of 536 practicing nurses. Data were weighted to correct for oversampling in some age strata. The sample was provided by the same medical professional panel provider as the 2007 and 2011 surveys.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.5 trillion, including managed assets of $1.9 trillion, as of October 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.
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