Consumers Are Not Preparing for Retirement

Consumers are more confident that they will have a comfortable retirement than they were during the recession, but they have not done much to plan for retirement, according to a survey by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. The survey reveals the following about workers in 2016:

  • 21% are very confident about having enough money for a comfortable retirement compared to 22% in 2015 and 13% in 2013.
  • 42% are somewhat confident compared to 36% in 2015.
  • 19% are not confident compared to 24% in 2015.
  • 11% with a plan are not confident about their financial security in retirement compared to 38% of workers without a plan.
  • 83% without a plan have less than $10,000 in their household’s savings and investments, excluding the value of their primary home and any defined benefit plans. In contrast, 35% of workers with a retirement plan have $100,000 or more in savings and investments.

Retirement plans key to millennial saving, poll indicates

Only 43% of millennials without access to a retirement plan via work say they are consistent in saving for retirement, compared with about three-fourths of millennials who have access to such a plan, a poll by Young Invincibles found. MarketWatch (2/17)

Financial Stress Affects a Majority of Employees

Financial stress affects 75% of employees, according to a study by GuideSpark. Employees surveyed said that the following areas give them the most financial stress:

  • 69% Saving enough to meet retirement goal.
  • 68% Having enough cash savings to cover the employee and their family if one loses their job.
  • 63% Being financially prepared for expected life changing events (i.e. marriage, new child, job change.

The study also reveals the following:

  • 81% employees are less likely to leave a company that helps them improve their financial standing.
  • 87% of Millennials expect employers to help them prepare for their financial future.
  • 78% of employees would chose to join a company that offers financial health benefits over one that doesn’t.
  • 81% of employees are less likely to leave a company helps them improve their financial standing.

Employees say these are the top benefits of a financial wellness program:

  • 81% Reduce financial stress
  • 76% Appreciate their company more
  • 65% Lower their healthcare costs
  • 62% Improve their physical health
  • 56% Enable them to focus more on their jobs

One In Five Baby Boomers Has No Retirement Savings

While the economy is bouncing back from the recession, Baby Boomers may have lasting consequences. New research from Mintel reveals that 20% of Boomers do not have any retirement savings. What’s more, 41% Baby Boomers have less than $250,000 saved for retirement. There are still concerns among Boomers who have been relatively good about saving, with more than $250,000 stashed away. Fifty-two percent are worried about having enough money to retire. Thirty-one percent are worried about outliving their money. Fifty-five percent of non-retired Boomers contribute regularly to a retirement savings account. These concerns are driving some Boomers to put off retirement with 15% saying that they do not plan to retire. This could be the result of Baby Boomers’ lack of education on retirement savings. Mintel research indicates that just 28% of Boomers say they understand enough about retirement investing compared to 11% of Boomers who have saved less than $100,000. Additionally, only one in 10 Boomers manage their finances according to a written financial plan, and 33% use a financial adviser to help with planning and investing. Only 10% of Boomers say they do not have financial concerns about life in retirement.

Boomers agree that major retirement concerns include having adequate health insurance (30%), paying for health insurance (29%) and paying day-to-day bills (29%). The youngest Boomers age 51 to 54 are significantly more likely than Boomers to be worried about having enough money to retire (66%) and paying day-to-day bills (39%). One solution is to engage Boomers in wellness programs.

It’s time for employees to review available benefits

As 2015 ends and 2016 begins, employees should review handbooks and ensure they are not missing out on valuable benefits, writes consumer advocate Dee Lee. Retirement benefits, savings plans, health and dental benefits, life and disability insurance, health and weight-loss programs, and flexible spending plans are among the benefits “worth real dollars” to employees, she writes. WBZ-TV (Boston) (12/28)

The Challenges Faced by Self-Employed Baby Boomers

Steady Revenue from Individual Policies

Twenty-six percent of self-insured Baby Boomers say that rising healthcare costs have reduced their ability to save, and 35% say that the rising cost of health insurance has hurt their business, according to a survey by Ameritrade. The study also reveals the following about self-employed Baby Boomers:

  • 63% don’t have the benefits of traditional employment (paid vacation, a better health benefit package, better insurance, professional support).
  • 51% want the next president to reduce healthcare costs, 64% don’t expect their needs to be among the president’s top five priorities.
  • 52% work long hours; 41% are never able to completely turn off work; 40% cope with constant financial pressure; 39% have had to prioritize their business over their personal life; and 30% have had to spend less time with their family.
  • 76% were traditionally employed before they set up their own businesses.
  • 77% say they could still be traditionally employed if they wanted.
  • 57% say that political and economic changes over the past three to five years are affecting their business.
  • 40% don’t support a $15 minimum wage hike. Thirty percent say it could hurt their business.
  • 20% say that the effects of government regulations have worsened compared to three to five years ago.
  • 61% are more anxious about saving money for retirement now; 59% are more anxious about earning a steady income from their business; and 53% are more anxious about expanding their business.
  • 57% say that political and economic changes, over the past three to five years, are affecting their business.

Premiums Are Lower When There Are More Hospitals

More competitive hospital markets had more than 8% reductions in premiums. That translates into savings of more than $20 a month for consumers in markets with less hospital concentration, according to a report commissioned by America’s Health Insurance Plans (AHIP). The report, authored by Scott Thompson, Ph.D. and published in the Antitrust Health Care Chronicle, finds that hospital systems with strong market influence can often negotiate higher rates for their services. Each additional effective hospital competitor is associated with a 1.5% drop in the cost of insurance premiums. Consumers in more competitive markets, such as Los Angeles, saw average monthly savings of $32.90 in reduced premiums when compared to consumers purchasing coverage in San Francisco, a market with fewer hospital competitors.

AHIP president and CEO Karen Ignagni said, “Consumers and employers benefit from competitive markets that promote affordability and choice. More needs to be done to encourage competition among providers. Hospital consolidation comes with a price that consumers and employers simply cannot afford.”

How HSAs Could Beat 401(k)s For Savings

For some employees, using an HSA for health care expenses in retirement may be better than saving in a 401(k) plan, according to a report by the Employee Benefit Research Institute (EBRI). Contributions to an HSA reduce taxable income; earnings on the assets in the HSA build up tax free; and distributions from the HSA for qualified expenses are not subject to taxation. “Depending on the rate of return in an HSA, these accounts could generate significant assets,” said Paul Fronstin of EBRI. If you contribute the maximum allowable amounts for 40 years to an HSA without making withdrawals, you could accumulate up to $360,000 if the rate of return is 2.5%, $600,000 if the rate of return is 5%, and nearly $1.1 million if the rate of return is 7.5%. However, he added that many people aren’t able to save in an HSA and pay their out-of-pocket health care expenses. Also, HSA balances may not be enough to pay all medical expenses in retirement even if maximum contributions are made for 40 years. For more information,

Wellness may help employees boost retirement savings, expert says

Corporate wellness programs may boost employee retirement savings by keeping people healthier as they age and reducing medical expenses, said Tim Minard, a senior vice president at the Principal Financial Group. He said future benefit discussions with employees will focus on a total wellness picture, which includes understanding how wellness and retirement plans intersect. (9/27)

Medicare Prescription Savings Through the ACA

The average person with traditional Medicare will save $5,000 from 2010 to 2022 thanks to the Affordable Care Act, according to an HHS report. Also, because of the health care law, more than 5.5 million seniors and people with disabilities saved nearly $4.5 billion on prescription drugs since the law was enacted. Seniors in the Medicare prescription drug coverage gap known as the “donut hole” have saved an average of $641 in the first eight months of 2012 alone. This includes $195 million in savings on prescriptions for diabetes, over $140 million on drugs to lower cholesterol and blood pressure, and $75 million on cancer drugs so far this year. Also in the first eight months of 2012, more than 19 million people with original Medicare got at least one preventive service at no cost to them.

In 2010, anyone with Medicare who hit the prescription drug donut hole got a $250 rebate. In 2011, people with Medicare who hit the donut hole began receiving a 50% discount on covered brand-name drugs and a discount on generic drugs. These discounts and Medicare coverage gradually increase until 2020, when the donut hole will be closed.

Because of the Affordable Care Act, many preventive services are now offered free to beneficiaries (with no deductible or co-pay). In 2012 alone, 19 million people with traditional Medicare have got at least one preventive service at no cost to them. This includes 1.9 million who have taken advantage of the Annual Wellness Visit provided by the Affordable Care Act – almost 600,000 more than had used this service by this point in the year in 2011. In 2011, an estimated 32.5 million people with traditional Medicare or Medicare Advantage got one or more preventive benefits free of charge. For state-by-state information on savings in the donut hole, please visit:

Last Updated 05/25/2022

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