2016 Financial Mindset Study - Aon · 2016 Financial Mindset ® Study ... and health care; ......

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Aon HewittConsumer Experience

2016 Financial Mindset® StudyKey findings on employees’ attitudes and behaviors toward finances and retirement

Table of Contents

Understanding the Employee Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Gap Widens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Help Me! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Focusing on Near Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 The Financial Wellbeing Lens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Who Responded? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

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Understanding the Employee Perspective

Recent years have seen a shift in how employers approach their retirement programs, as well as in how employees save and plan for the future. As more responsibility falls to the individual, understanding the employee perspective is more vital than ever when developing effective programs that drive the positive actions needed to ensure better outcomes.

Aon Hewitt’s Financial Mindset® Study explores employees’ attitudes and behaviors related to their financial experiences, including literacy, confidence, engagement, and intentions. The study explores several key areas:

Perspectives. What are employees thinking when it comes to their finances and saving?

Behaviors. What are employees doing—or not doing—and how is that affecting their financial wellbeing?

Guidance. Where do employees turn for help? What do they want from their employers?

Along with reporting our findings about the employee financial mindset, we recommend practical actions you can take to meet your employees where they are and help them improve their overall financial wellbeing.

N OTA B L E D I F F E R E N C E S

This report includes charts that reflect the primary insights from the survey. In addition, we highlight notable differences in these areas:

Additionally, when we see significant changes or reinforced findings year over year from the inaugural study in 2015, we note those.

Financial Wellbeing Stage**

Security Need to understand and manage their day-to-day financial situation

Foundation Have their day-to-day situation under control and need to set longer-term financial goals

Growth Financial goals are set; need to find the best way to reach them

Freedom Financial goals are being met; moving toward or into retirement with shift to determine how they will pay themselves in retirement

Generation

Boomers Born 1946–1964Gen Xers Born 1965–1978Millennials Born 1979–1996(Established: 1979–1987; Emerging: 1988–1996)

Gender

MenWomen

Household Income < $35,000

$35,000–$64,999 $65,000–$99,999

≥ $100,000

Financial Literacy*

HigherLower

*See pages 30–31 for details on financial literacy rating .**See page 53 for details on Financial Wellbeing stages .

2 2016 Financial Mindset® Study

Key Findings

Employees face a myriad of financial demands— from managing day-to-day expenses, to planning and saving for the future, to being prepared in case of an emergency. Yet many are buried by debt; struggling to save or pay for housing, education, and health care; and wondering if they will have enough to retire comfortably. While plan design has proven to be a huge influencer on employees’ retirement saving behaviors, more is needed to improve employees’ overall financial wellbeing.

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The Gap Widens Between Perception and RealityEmployees continue to express confidence when it comes to their financial acumen, yet we see an even greater divide than last year, between their perceived knowledge and understanding of money and finances and how much they actually know and what they are doing.

Help Me! What Employees Want and NeedEmployees want help, and they are looking to their employers to provide tools, resources, and guidance beyond their traditional retirement benefit plans. They want help across the financial wellbeing spectrum—developing a budget, reducing debt, saving for education or a house, saving and investing for retirement, planning, and moving into retirement—all the way to estate planning and wills.

New this year, we tested respondents’ financial literacy. We discovered that many employees are in need of basic education. We also explored the competition for retirement saving dollars, including student loans and health savings accounts (HSAs).

Focusing on Near RetireesFor the first time, we focus attention on “near retirees” (those who plan to retire within three years) to better understand their immediate needs, concerns, and desires as they plan to move into the next phase of their lives.

The Financial Wellbeing LensThis year, one of the top five initiatives for employers is to create or focus on the financial wellbeing of employees—expanding beyond retirement decisions.* In light of this, we asked questions focused on financial wellbeing and found that employees fall into different stages based both on their attitudes and behaviors.

*Aon Hewitt: 2016 Hot Topics in Retirement and Financial Well-Being


What Can Employers Do?

Evidence is clear that implementing plan design features such as auto-enrollment, auto-escalation, and rebalancing can be effective in driving positive behavior in defined contribution plans. In addition, the use of financial guidance tools has been shown to improve outcomes for participants as well. But what other actions can you take that will build upon the financial mindset of employees and get that mindset to work for you? Here are a few recommendations.

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Develop a Financial Wellbeing StrategyYour financial wellbeing strategy should articulate your objectives for the financial wellbeing of your employees (and their families), your role in helping employees achieve financial wellbeing, and your employees’ role. Ideally, your financial wellbeing strategy should support any total wellbeing strategy your company may have, as well as complement the overall employee value proposition.

Offer a Suite of Independent Financial Planning ToolsExpand your retirement tools and education to offer a full suite of independent financial planning—education, modeling tools, investment guidance and advice, and services to help people set and meet their financial goals. Today there is a variety of tools and services designed to make it easier for employees to tackle some of their biggest financial challenges such as paying back student loans, managing debt, and managing an effective retirement income stream.

It’s worth noting that there is no single solution that will meet all your employees’ needs. Instead, you will most likely require a combination of services, vendors, and communication initiatives. This study can help you better understand the diversity of your population, allowing you to factor in gender and generational needs and preferences as you develop and implement your financial wellbeing strategy.

Learn More About Your Employees—What They Think and What They WantThe more you know, the more you can do. Look beyond the behavioral data of your retirement plan and consider employee research options like attitudinal segmentation and employee listening to dig deeper into what your employees think and want. Consider the financial wellbeing stages in this report as a way to look at your population and its various needs that go beyond traditional generational stereotypes.

Promote What You HaveEmployees overwhelmingly want help from their employers, but often they don’t even know what is available. Completing an audit of your current tools and resources (among all your vendors) can help you promote the right tools to the right people at the right time.

Provide Relevant and Ongoing EducationTo drive the actions most critical to your organization and your people, personalize your communication and education to employees’ behaviors, preferences, and financial wellbeing stages. In addition, use an array of media channels, including high tech and high touch, to reach your diverse population. On-demand education and resources (outside internal company firewalls) with clear calls to action can ensure your employee populations always have what they need to move forward financially.

Look throughout this report for additional Opportunities to help your employees improve their financial wellbeing.

Consider This…The five universal financial goals for employees are:

• Debt management

• Emergencies

• Health care savings

• Retirement

• Protection (aka insurance)

How does your benefits program help employees meet these goals?


The Gap WidensBetween Perception and RealityEmployees continue to express confidence, but we see an even greater divide this year between their general knowledge and perceptions of their financial situation and what they actually know and are doing.

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75% 62% feel in control of their finances

BUT

are just getting by, or worse

Top Financial WorriesSaving for the future

Keeping up with the cost of living

Paying for health care and services

35%

Debt is ruining the quality of their lives


75%

72%

43%

35%

73%

65%

41%

30%

“I’m more in control of my finances and pretty savvy, but I’m still intimidated by many aspects of finances.”

In 2016, a greater majority of respondents indicated that they feel in control of their financial future (75% compared to 73% in 2015) and even more describe themselves as financially savvy (72% compared to 65% in 2015). These positive perceptions continue to be higher among men than women and also higher among Millennials than other generations.

However, despite describing themselves as financially savvy or feeling in control, more respondents indicate that financial matters (including the idea of approaching an advisor) intimidate them and debt is ruining their quality of life. Millennials, in particular, showed increased concern with debt compared to 2015 (39% vs. 31%).

Who are the debt-burdened?

It is not surprising that the over one-third who say their level of debt is ruining the quality of their lives are more likely to earn less income; be younger (and have student loans); and be less disciplined in their credit, spending, and regular savings than those not expressing this situation. In addition, fewer of those in this group contribute to their retirement plan, and they are more likely to be afraid they will run out of money in retirement. This group is also more likely to see themselves as not financially savvy, having less control over their finances, and less financially literate. Interestingly, this group is equally likely as the others to say it is important to them to be debt-free.

As employers consider helping this group, it is important to know they are less likely to feel comfortable with financial advisors and more likely to want help from their employers with all financially related activities; in particular, they are more likely to rank credit counseling and seminars on debt management from employers as valuable. They are also nearly three times more likely than others to say they want financial activities to be performed by professionals rather than being “do-it-yourselfers” (DIYers).

Financial Viewpoint (Percentage Who Agree)*

2016 2015

I feel confident I am in control of my financial future

I’m often intimidated by financial matters

I’d describe myself as financially savvy

My level of debt is ruining the quality of my life

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

*2016 figures represent the percentage citing “Strongly Agree,” “Agree,” or “Slightly Agree” on a six-point scale . 2015 represents “Strongly Agree” or “Agree” on a four-point scale .

Employees with lower financial literacy are less likely to feel in control (71%) or financially savvy (64%), and more likely to feel intimidated (55%) or concerned about debt (39%).

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“I’m more in control of my finances and pretty savvy, but I’m still intimidated by many aspects of finances.”(Continued)

48% 72% of employees have lower

financial literacy

Lower financial literacy

BUTof employees describe themselves as financially savvy

Financially savvy


38%

38%

48%

49% 49%

14%

43% 44%

42%

13%

9%13%

“I may feel more financially savvy, but that doesn’t mean I’m comfortable with my finances.”

This year’s survey saw a significant decrease in the number of respondents who feel financially comfortable (from 43% to 38%), with the biggest drop among Millennials (49% in 2015 to 38% in 2016). Also, the numbers of both Millennial and Gen Xer respondents who say they are experiencing financial difficulties increased. We see financial savviness contrasted with generally lower financial literacy scores, indicating that people may be overconfident when it comes to their understanding of financial topics.

How My Personal Financial Situation Is Going

I'm financially comfortable I have just enough to get by I'm experiencing financial difficulties

Millennial View of Personal Financial Situation

I'm financially comfortable I have just enough to get by I'm experiencing financial difficulties

10%

10%

0%

0%

20%

20%

30%

30%

40%

40%

50%

50%

60%

60%

2016

Millennials 2016

2015

Millennials 2015

Women (32%) are less likely to say they are financially comfortable than men (44%).

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“I may feel more financially savvy, but that doesn’t mean I’m comfortable with my finances.” (Continued)

Attitudes Toward Financial Planning (Strongly Agree or Agree)

2016 2015

79%

48%

42%42%

27%

28%

26%

79%

44%

44%

27%

32%

29%

It’s important for me to be debt-free

Credit cards and/or debit cards make it too easy to spend

more than I want to

I don’t feel comfortable approaching financial advisors or

investment companies for help

I know what steps I need to take to ensure that I have

a comfortable retirement

I feel overwhelmed by the number of different ways

I can invest my money

I don’t have as much discipline as I would like when it comes

to how I save my money

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

When asked about their approach to financial planning, employees continue to cite the importance of being debt-free (79%) and knowing the steps to ensure a comfortable retirement (48%).


“I’m more worried about the cost of health care and saving for the future than I am about short-term financial needs.”

When asked about what worries them financially, more employees listed saving for the future (46%), keeping up with the cost of living (38%), and the cost of health care (28%) as their top three concerns compared to 2015.

Overall, Millennials tend to be more worried than Boomers or Gen Xers. Compared to 2015, Millennials are even more worried about most items, particularly saving for the future (52% in 2016 vs. 48% in 2015), health insurance/services costs (44% in 2016 vs. 40% in 2015), and monthly bills (31% in 2016 vs. 26% in 2015).

What Worries Me Financially (Very Worried or Fairly Worried)

2016 2015

46%44%

Saving for the future (retirement, education, etc.)

19%20%

Financially supporting a parent or adult sibling

38%36%

Keeping up with the cost of living

19%19%

Adult children being financially dependent on you

28%N/A

Paying for health insurance or health services

18%16%

Paying your mortgage (among homeowners)

26%26%

Paying your rent (among non-homeowners)

18%N/A

Paying for dependent care (adult or child)

23%22%

Paying your monthly bills

16%15%

Having enough money to put food on the table

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

When it comes to paying for health insurance or services, I'm worried about:*

Future costs: 91%Out-of-pocket expenses: 86%Premiums: 81%

*Figures represent the percentage citing “Very Worried” or “Fairly Worried” among those worried about paying for health insurance or health services .

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What Motivates Me to Save

2016 2015

84%

83%

77%

53%

38%

77%

80%

76%

51%

38%

“Being seen as financially responsible, having a comfortable retirement, and being prepared for the unexpected drive my savings behavior.”

When asked what motivates them to save, employees shared their desire to be financially responsible (83%), to have a comfortable retirement (84%), and to be prepared in case of an emergency (77%). As in 2015, these reasons continue to be top motivators. However, this year we saw a rise in the importance of having a comfortable retirement, up seven percentage points since 2015 (and surpassing being financially responsible).

Being able to do what I want when I retire

Being prepared for any unforeseen problem

Being financially responsible

To buy something I want, but can’t afford right now

Hearing family/friends talk about their saving plans

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Millennials (50%) are more likely than Boomers (28%) to select family/friends.

Buying something is more likely to motivate Millennials to save than Boomers, particularly for Emerging Millennials (68%).

Opportunity

The desire to be financially responsible can set the tone of communications. And the use of testimonials and peer comparisons can be an effective tool to reach younger workers.


What Do I Associate “Wealth” With?

All Millennials Gen Xers Boomers

80%

19%

1%

81%

18%

1%

74%

25%

1%

84%

14%

2%

“Wealth provides security, stability, and peace of mind more so than fun, freedom, and luxury.”

Retirement marketing and communications often focus on what’s possible if you save and invest appropriately. But employees across all age groups see wealth more as a source of security and peace of mind. For employers, it will be important to find ways to appeal to this perspective and set of values to drive better retirement and savings behaviors and outcomes.

Security, peace of mind, stability, safety

Opportunity, fun, freedom, luxury

Vulnerability, being a target for scams or fraud,

being judged by others

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Established Millennials (78%) are more likely to describe wealth as “security, peace of mind, stability, safety” than Emerging Millennials (67%).

Emerging Millennials (32%) are more likely to describe wealth as “opportunity, fun, freedom, luxury” than Established Millennials (21%).

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Women (41%) continue to be more likely to cite affordability as a barrier than men (32%).

Emerging Millennials (44%) are more likely to mention this than Boomers (22%), and Established Millennials (39%) are just as likely as Gen Xers (39%).

Employees with lower financial literacy are more likely than those with higher financial literacy to view all as barriers, particularly affordability (43% for lower vs. 30% for higher).

What Keeps Me From Saving

2016 Very Significant/Significant Barrier 2016 Somewhat of a Barrier 2016 Not a Significant Barrier/Not a Barrier at All 2015 Very Significant/Significant Barrier 2015 Somewhat of a Barrier 2015 Not a Significant Barrier/Not a Barrier at All

36%

22%

17%

16%

12%

19%

22%

21%

19%

19%

45%

56%

63%

65%

69%

37%

19%

16%

14%

15%

20%

23%

21%

20%

20%

43%

58%

63%

66%

65%

“My biggest challenge to saving is affording it.”

When asked about barriers to saving, simply being able to afford to save (36%) was much more significant than all other barriers.

I can’t afford to save

I’m concerned about not being able to access my

savings when I need it

I don’t understand where to save

I don’t understand how to save or my saving options

I don’t have any need for saving right now

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Millennials are nearly 2X as likely to cite understanding where to save (23%) and how to save (23%) as barriers as other generations (14% and 13%).


If you were to receive $1,000 unexpectedly, what would you do with it?

“I opt to save when given the opportunity.”

We asked employees what they would do if they received an unexpected gift of $1,000. Would they save it, spend it, or do a little bit of both? A majority of employees (47%) indicate that they would save at least part of the gift. And DIYers are more likely to save or invest. (For more on DIYers, see page 36.) Interestingly, even with financial tensions higher this year, 29% would spend all or most of it (compared to 23% in 2015). Millennials, the group feeling the financial strain the most this year, are driving this increase toward spending (32%).

2016

2015

29% spenders

47% savers

24% spenders

51% savers

25% 22% 24% 12% 17%

24% 27% 25% 11% 13%

Savers SpendersBalancers

Save/invest most of it, spend some of it

Spend about half, save/invest about half

Save/invest nearly all of it

Spend most of it, save/invest some of it

Spend nearly all of it

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My Saving Priorities (High or Moderate Priority)

2016 2015

88%

85%

66%

55%

44%

45%

40%

86%

82%

67%

51%

N/A

41%

35%

“I know I need an emergency fund, but building resources for my future is also important to me.”

Employees’ saving priorities are in tune with their motivations; the top three priorities are having an emergency fund (88%), saving for retirement (85%), and accumulating wealth (66%).

Having an emergency fund

Wealth accumulation/investments

Retirement income

Vacation or travel

Education expenses (your own or others)

Making a large purchase such as a car

Home purchase

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

As we might expect, saving for retirement as a priority varies by age, with 91% of Boomers but only 65% of Emerging Millennials listing it as a top priority.

Opportunity

Consider looking for financial wellbeing solutions designed to make it easier to save for an emergency.


What I’m Currently Saving For*

2016 2015

67%

63%

55%

50%

47%

47%

45%

68%

65%

62%

49%

N/A

N/A

N/A

51%

37%

50%

48%

“For the most part, I’m currently saving for what’s most important to me.”

Just like last year, there is a direct correlation between what employees state as their top priorities for saving and what they say they are actually saving for—except when it comes to vacation/travel. When asked to prioritize their saving reasons, employees listed saving for retirement, having an emergency fund, and wealth accumulation/investments. However, when asked what they are actually saving for today, vacation/travel crept into the top three, surpassing wealth accumulation/investments.

Retirement income

Vacation or travel

Having an emergency fund

Making a large purchase such as a car

Education expenses (your own or others’)

Education expenses (others’)

Home purchase

Education expenses (your own)

Wealth accumulation/investments

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

*Among those who say each is a high or moderate priority .

Men are more likely than women to be saving for retirement income (70% vs. 64%) as well as wealth accumulation/investments (53% vs. 36%).

Millennials (57%) are nearly twice as likely as other generations (37%) to save for a home.

Established Millennials are less likely to be saving for education expenses than other generations, but it’s still a saving reason for most of this group.

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My Approach to Retirement Saving

2016 2015

“I save for retirement when I can, but not always with a plan in mind.”

In 2016, the need to save for retirement is gaining traction. When asked to describe their approach to saving, a majority of employees (70%) say they save regularly, although one-third do not.

I save for retirement regularly, but I don’t really have a long-term plan

I don’t save for retirement yet, because I cannot afford to

I save for retirement regularly according to my long-term plan

I plan to start saving for retirement, but haven’t had time to start

I don’t save for retirement yet, because I don’t know

how to get started

I don’t save for retirement regularly, but do save from

time to time, when I can afford to

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

37%38%

33%30%

16%15%

6%

2%

6%

5%

9%

3%

Boomers (77%) are more likely to save for retirement regularly. However, three-quarters of Gen Xers (73%) and well over half of Millennials (60%) also say the same.

Both men (69%) and women (70%) save, but men (33%) are more likely than women (27%) to have a long-term plan.


Factors in Contribution Decision*

2016 2015

“Deciding how much to save comes down to what I think I can afford.”

Three of four employees say they are contributing to their employer retirement plans. Of those, perceived affordability (48%) is the primary driver behind contribution levels.

Compared to Millennials (43%), more Gen Xers (52%) cite affordability as a factor. Millennials are more likely than other generations to say they contributed up to the match (31%), relied on tools or resources (19% employer, 12% nonemployer), or consulted family, friends, or coworkers (15%). Boomers (22%) are more likely than other generations to say they contributed the most allowed by the plan.

Contributed the most I felt I could afford

Contributed the most allowed by the plan

Went up to the company match level

Used tools or resources provided by employer

Used tools or resources from a trusted website/app

(not provided by employer)

Consulted a financial advisor not provided through my employer

Consulted a family member, friend, or coworker

0% 10% 20% 30% 40% 50% 60%

48%48%

26%29%

16%20%

16%

8%

8%

9%

17%

12%

10%

9%

*Among those who contribute to their employer-sponsored retirement plan .

Opportunity

Consider auto-escalation to help your employees save more over time.

According to Aon Hewitt's 2016 Universe Benchmarks, the average employee saving rate is 7.7%.

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Retirement Savings and Investment Approach

Aggressive Balanced Cautious Unsure

“I consider myself mostly cautious when it comes to investing.”

When asked about their investing approach, most employees (73%) regarded their investing style for retirement savings as cautious or balanced—even more so among women (79%).

Perception vs. Reality

In comparison, Aon Hewitt’s universe of approximately 2.5 million participants shows actual defined contribution investment behaviors to be more aggressive than participants may believe. Using equity allocation as a proxy for the risk level of the portfolio, close to six of 10 participants would be aggressive:

Allocation to Equities 0% – 19% 20% – 49% 50% – 74% 75%+

Percent of Participants 7% 8% 26% 59%

2016

Men

2015

Women

Source: Aon Hewitt's 2016 Universe Benchmarks

22% 34% 39% 5%

5%

21% 33% 40% 6%

6%

28% 34% 34%

16% 34% 45%


Actions I’ve Taken to Forecast My Retirement Income (Percentage Who Say Yes)

2016 2015 Men Women

“I need to plan for my retirement.”

This year’s survey saw a slight increase in respondents who had used modeling tools to project their needs in retirement. Still only about half of employees are forecasting their retirement income needs (56%) or determining saving requirements (55%). Even fewer say they crafted a financial plan for their actions to achieve their goals (41%) or projected how to withdraw their savings in retirement (36%).

When looking at gender, there appears to be a gap in retirement planning between men and women. Women are less likely to save for retirement with a long-term plan, and they are less likely to take specific actions to determine their retirement income needs.

Projected how much money I will need to live on when I retire

56%

60%

53%

53%

Compared how much I will need in retirement and how

much I am likely to have

55%

58%

54%

53%

Created a financial action plan that details what I need to do

in order to retire by my goal

41%

44%

40%

37%

Projected how to withdraw from savings in retirement

36%

39%

N/A

32%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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Amount I Need to Save by the Time I Retire to Live Comfortably

“I think I know how much I need to retire comfortably, but I’m not sure.”

Of employees surveyed, 48% think they can retire comfortably with less than $1 million, while 14% had no idea and could not even guess at the amount they would need. The amount of Boomers who had no idea how much they would need was even higher, at 18%.

5%

0%

10%

15%

20%

25%

30%

20%

$1,500,000 or more

$1,000,000 – $1,499,999

18%

$500,000 – $999,999

22%

$250,000 – $499,999

14%

$100,000 – $249,999

9%

Under $100,000

3%

I have no idea and can’t

even guess

14%

Opportunity

Retirement income modeling tools and personalized statements can provide a clear picture of how much is needed and what steps can help get an employee closer. Make it real.

Boomers18%


When I Expect to Retire (Mean Age)

“I expect to retire at age 66, although I’m starting to focus less on my age and more on whether or not I’ve saved enough.”

While many employees associate retirement with a specific age (66), a shift in the mindset of employees has begun—moving away from using age to guide their retirement timing, and instead gauging if they have saved enough. In other words, will they have enough money to provide the freedom and income they want through retirement?

Study findings also reveal differences in considerations among the financial wellbeing (see page 53) and financial literacy employee segments (see pages 30–31). Those in the Growth stage (59%) and those with higher financial literacy (60%) are more likely to say the most important consideration in determining when to retire is when they’ve accumulated enough financial resources to have a comfortable retirement. Conversely, people with lower financial literacy are more likely to say the most important consideration is when their health or mental capability begins to fail and they can no longer work (25%) or when they reach a certain age (22%).

All Employees

Men Women

Millennials BoomersGen Xers

Security Foundation Growth Freedom

66 years2015: 64 years



67 years 65 years




66 years 64 years

Financial Wellbeing Stage

Security Need to understand and manage their day-to-day financial situation

Foundation Have their day-to-day situation under control and need to set longer-term financial goals

Growth Financial goals are set; need to find the best way to reach them

Freedom Financial goals are being met; moving toward or into retirement with shift to determine how

they will pay themselves in retirement

Aon Hewitt 25

“I expect to retire at age 66, although I’m starting to focus less on my age and more on whether or not I’ve saved enough.” (Continued)

Has the Most Influence on When I Plan to Retire

2016 2015

When I have accumulated enough financial resources to have a

comfortable retirement

When I reach a certain age

When my health or mental capability begins to fail,

and I can no longer work

Some other factor

I do not plan to retire

0% 10% 20% 30% 40% 50% 60%

55%48%

22%23%

19%24%

2%

2%

2%

3%

Boomers: 43% Gen Xers: 57% Millennials: 66%

Boomers: 26% Gen Xers: 17% Millennials: 14%


Help Me!What Employees Want and NeedEmployees want and need financial help—and they are looking to their employers for it. Whether it’s help getting started, saving for goals, or planning for the future, employees want more from their employers. And our study found they need help, especially when it comes to basic financial literacy, meeting short-term and long-term savings goals, and being prepared for the next step ahead.

Aon Hewitt 27

91% expect their employer to help them save for retirement

49% spend time at work on their personal finances

48% did not pass the financial literacy test


Time Spent on Financial-Related Activities Each Month

1–4 hours 5–8 hours 9–12 hours 12+ hours

“I spend time at work dealing with my finances.”

Half of employees (49%) say they spend some time at work dealing with their personal finances. Based on what employees said in this survey, the time spent at work translates to 1%–2% of payroll.

Those in the Security and Freedom financial wellbeing stages are less likely to spend time at work on financial-related activities than those in the Foundation and Growth stages—yet Foundation and Growth account for three-fifths of the total population.

51% 30% 12% 7%

Those in the Security stage are more likely to spend 1–4 hours (58%) than those in other stages (48%).

Those in the Freedom stage are more likely to spend 12+ hours (13%)

than those in other stages (7%).

Aon Hewitt 29

“I spend time at work dealing with my finances.” (Continued)

Time Spent on Financial-Related Activities Each Month While at Work

0 hours 1–4 hours 5–8 hours 9–12 hours 12+ hours

2%

1%-2% =of payrollspent dealing with

finances at work

Opportunity

Because your employees are spending time at work on their personal finances, consider making it easier for them by offering financial wellbeing education, tools, and programs.

51% 36% 8% 3%

Women are less likely to spend any time at work than men (55% vs. 47% for 0 hours).

Millennials are more likely than others to spend time at work (62% at least 1 hour; 19% more than 4 hours).


Answered 4 out of 5 Financial Literacy Questions Correctly

“I need help understanding the basics.”

To understand the financial literacy of employees, we asked respondents a series of five basic financial questions. Only half of employees (52%) were able to answer four or more questions correctly, which is the threshold for higher financial literacy. The employee groups less likely to answer at least four questions correctly are women, Emerging Millennials, and employees with household income under $65,000.

Men

All Employees

60%

52%

39%

38% 53% 66%

43%

Women

44%

32% 56% 61%All Millennials

< $65K Household Income

$65K–$99.9K Household Income

$100K+ Household Income

Established MillennialsEmerging Millennials Gen Xers Boomers+

Aon Hewitt 31

“I need help understanding the basics.” (Continued)

Q1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

1. More than $1022. Exactly $1023. Less than $1024. Don’t know.

Q2. Imagine that the interest rate on your savings account is 1% per year and inflation is 2% per year. After 1 year, would you be able to buy more than today, exactly the same as today, or less than today with the money in this account?

1. More than today2. Exactly the same as today3. Less than today4. Don’t know.

Q3. Is the following statement true or false?Buying a single company stock usually provides a safer return than a stock mutual fund.

1. True2. False3. Don’t know.

Q4. Is the following statement true or false?A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.

1. True 2. False 3. Don’t know.

Q5. If interest rates rise, what will typically happen to bond prices?

1. They will rise.2. They will fall.3. They will stay the same.4. There is no relationship.5. Don’t know.

Financial Literacy Test

Answers: Q1) 1 Q2) 3 Q3) 2 Q4) 1 Q5) 2 .Source: FINRA Investor Education Foundation’s National Financial Capability Study (NFCS) .


Perceptions of Different Types of Debt

Bad Debt Good Debt

“I understand the difference between good and bad debt.”

While our study found issues with financial literacy (page 30), employees were able to differentiate between good and bad debt, with debt that helps employees grow financially often being regarded as good debt.

93% 7%

Payday loan

82% 18%

Revolving credit card debt

63% 37%

Loan from employer-provided retirement plan

40% 60%

Auto loan

38% 62%

School loan

38% 62%

Home equity loan

25% 75%

Business loan

10% 90%

Mortgage-home loan

Just over one-half (54%) of employees with a household income under $65K view this as bad debt.

More Millennials (27%) consider this to be good debt than other generations (14%).

Opportunity

Educate your employees on the impact of taking a loan from their employer-sponsored retirement plan so that they understand the risk of losing potential growth.

Aon Hewitt 33

What I Understand About Target Date Funds (TDFs)

Neither Correct Answer Incorrect Answer

“I need help understanding what target date funds are, even though I’m investing in them.”

As more employers turn to target date funds (TDFs) for their investment lineups*, we wondered how well employees understood them. What we discovered is that nearly 60% of employees admit not knowing anything about target date funds, and only a small percentage of respondents are able to select one or more correct definitions.

Also interesting is that over half of employees in the Growth (51%) or Freedom (53%) financial wellbeing stages do not know either, yet these are the two stages most heavily focused on investing.

Employees in these groups tend to say they don’t understand anything about TDFs:

• Those with lower financial literacy (73%)

• Less than $65K household income (70%)

• Those in the Security financial wellbeing stage (68%)

• Women (66%)

I don’t know anything about TDFs

A TDF rebalances over time

A TDF contains a mix of investment options that best

reflect appropriate risk based on your anticipated retirement date

A TDF is designed so you only need to invest in

one fund instead of several

All TDFs have the same fees, asset location, and performance

A TDF’s investment approach tends to become more aggressive

as your retirement date gets closer

0% 10% 20% 30% 40% 50% 60% 70%

58%

30%

13%

9%

3%

7%

*Aon Hewitt: 2015 Trends & Experience in Defined Contributions Plans. The report found that 90% of employers offer target date funds in their plans .

Opportunity

To make it simpler for your participants to understand, use infographics and illustrations when explaining what TDFs are and how to use them. And be sure to avoid industry jargon.


What Triggers Me to Change My Retirement Plan Investment Allocation (Ranked 1 or 2)

“I need help knowing when to change my investments.”

Changes in the overall economy, recommendations from financial professionals, and periodic self-reviews contribute to investment allocation changes in employees’ retirement plans.

Changes in the overall economy

Periodic review reveals a change is needed to achieve

my targeted allocation

Recommendation from advisor, planner, broker, or other investment professional

Changes in stock market indices or performance

Advice or recommendations from media sources

Advice from family or friends

Not applicable because I don’t have any money in a retirement savings account

Dissatisfaction with performance of current allocation

Other

0% 5% 10% 15% 20% 25% 30% 35% 40%

35%

30%

31%

23%

6%

20%

12%

23%

7%

Men (38%) are more likely to cite economy changes than women (31%).

Women are more likely than men to cite professional recommendations (33% vs. 28%) and advice from family/friends (21% vs. 17%).

17% of Emerging Millennials say they don't have money saved in a retirement savings account.

Those in the Growth (23%) and Freedom (26%) stages are more likely to cite professional recommendations.

Aon Hewitt 35

How I Think My Employer’s Retirement Benefits Compare to Other Companies

Well Above/Above About the Same Well Below/Below

Strongly Agree/Agree Slightly Agree Slightly Disagree Strongly Disagree/Disagree

“For the most part, my retirement benefits are sufficient.”

As in 2015, employees view their retirement benefits as about the same as others and are generally satisfied. There continue to be mixed views about the availability of resources, with less than one-half (45%) strongly agreeing or agreeing that their company offers the resources they need to prepare for retirement.

Overall, I’m satisfied with my

company’s current retirement plan(s)

My company offers the resources I need to help me prepare

for retirement

2016

2016

2016

2015

2015

2015

33%

47%

33%

46%

49% 18%

50% 17%

29% 10% 14%

27% 12% 16%

45% 31% 10% 14%

44% 31% 15%11%


Financial Activities With Which I May/May Not Want Help From My Employer*

I want to do this myself without any help I could use a bit of help or direction before I take action I want specific advice before I take action I want this done for me by someone else

“I prefer to manage my personal finances, but I want help with retirement.”

Employees generally want to manage their personal finances on their own, but they are split about 50–50 when it comes to wanting help with retirement and other long-term planning.

When we look at employees who prefer to handle financial situations on their own (DIYers) rather than have it done for them (“Do-It-For-Mes”), we find that across all areas, Millennials are less likely to be DIYers. Interestingly, household income level does not necessarily distinguish between DIYers and those seeking advice. But we do find that employees in difficult financial situations would appreciate guidance in budgeting, debt management, building an emergency fund, and saving for large purchases.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Create a will or estate plan 17% 26% 32% 25%

Initiate/go through retirement process 19% 30% 39% 12%

Provide income in retirement 25% 33% 30% 12%

Save and invest for longer-term goals 27% 34% 28% 11%

Buy a home 33% 32% 29% 6%

Save for short-term goals 61% 23% 12% 4%

Build an emergency fund 56% 4%27% 13%

Manage my debt 57% 6%24% 13%

Create and manage a budget 53% 27% 15% 5%

Those with lower financial literacy are more likely to want their employer to provide retirement income (14%) or help them save/invest for longer-term goals (12%).

Understanding DIYers

Those who prefer to do things themselves (the DIYers) are more likely to rank “Financial information and/or advice website” and “Seminar on investing” as helpful than the Do-It-For-Mes, while the Do-It-For-Mes are more likely to value “Access to personal investment advisor”—not surprisingly .

Of course, across all the activities, by definition DIYers are less likely to believe employers should help—but the difference is very small for “Save for retirement needs .” Both groups believe this is an appropriate role for employers . Where they differ most is “Help with debt management .”

*Among those to whom this activity is applicable .

Aon Hewitt 37

Extent to Which I Believe Employers Should Help With the Following (a Lot or Somewhat)

2016 2015

“I want my employer to help me save and provide individual advice. But I rely on other resources, too.”

Consistent with last year’s findings, almost all employees (91%) expect their employers to help them save for their futures, while other needs have declined slightly year over year. Millennials are more likely than the other generations to expect help across all items, including establishing an emergency fund (57%), saving for children’s education (59%), helping with student loans (63%), managing debt (54%), saving for short-term needs (46%), and managing a budget (42%).

employees would be comfortable sharing financial information with their employer for more personalized financial guidance .

Save for retirement/ long-term needs

Save for children’s education

Establish an emergency fund

Pay off a portion of student loans or refinance at lower rates

Save for short-term needs

Create or manage a budget for personal expenses

Help with debt management

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

91%

49%

91%

56%

49%52%

47%

41%

36%

46%

52%

N/A

N/A

42%

6 in 10

Two in three employees with student loans believe employers should help with paying off or refinancing their loans.


“I want my employer to help me save and provide individual advice. But I rely on other resources, too.” (Continued)

Most Helpful Services My Employer Could Provide (Ranked 1, 2, or 3)

The leading request of employers is to provide access to a personalized investment advisor, followed by retirement planning seminars and access to a financial website providing education and/or advice.

Access to personal investment advisor

Financial information and/or advice website

Seminar (in-person or online) on retirement planning

Seminar (in-person or online) on investment

Seminar (in-person or online) on general finances

Credit counseling

Seminar (in-person or online) on debt management/budgeting

0% 10% 20% 30% 40% 50% 60% 70% 80%

59%

54%

47%

37%

33%

34%

34% Those with lower financial literacy are more likely than other employees to say these services would be helpful.

Aon Hewitt 39

“I want my employer to help me save and provide individual advice. But I rely on other resources, too.” (Continued)

Sentiments About Financial Professionals (Strongly Agree, Agree, or Slightly Agree)

Most employees view financial professionals positively, though not overwhelmingly so, and they regard them as one of the most helpful services employers could provide.

Financial professionals are truthful and ethical

Financial professionals act in the best interest of consumers

62%

58%


“Even though I want help, I trust myself the most.”

Trustworthiness of Financial Guidance Sources*

While employees want their employers to provide help, they ultimately trust themselves the most (87%). However, they do look to other resources such as retail brokerage websites, banking websites, and financial apps. Millennials are leading the way on technology usage, being the group more likely to rely on financial tracking or bank websites and apps in place of investment/brokerage websites—the latter of which is #1 for Gen Xers and Boomers.

Myself

My financial advisor, planner, or accountant—or financial

advisors in general

My bank

My employer

Family or friends (who aren't financial professionals/advisors)

My investment/brokerage company—or investment

companies in general

87%

76%

72%

70%

59%

67%

*Figures represent percentage citing 4, 5, or 6 on a six-point scale where 6 is "Completely Trustworthy" and 1 is "Not at all Trustworthy ."

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Aon Hewitt 41

“Even though I want help, I trust myself the most.” (Continued)

Resources I Rely on for Financial Information and Management

Investment/brokerage company websites

Bank websites

Websites that help you track spending, budgeting, bills

Apps that allow you to view financial information, account

information, or make transactions

Text or email account alerts

None

Apps that help you track spending, budgeting, bills

Other

0% 5% 10% 15% 20% 25% 30% 35% 40%

33%

31%

28%

26%

10%

4%

20%

21%

Employees with lower financial literacy (26%), those whose household income is under $65K (26%), and Boomers (31%) are more likely to say they do not rely on any resources.

Opportunity

Encourage financial wellbeing through a range of tools and resources and heavily promote their availability throughout the year.


Student Loan Prevalence

“I know I should save, but I need help figuring out where.”

Ideal Versus Actual Emergency Fund

Less than 3 months’ salary 4–5 months’ salary More than 6 months’ salary I haven’t saved in an emergency fund because I have another way to address this need or don't think I need it

3 months’ salary 6 months’ salary I haven’t saved in an emergency fund, but would like to

Emergency FundFinancial experts advise having at least three months’ salary saved in an emergency fund. The good news is almost all respondents (98%) said the ideal emergency fund size consisted of three months’ salary or more. Interestingly, 62% say it should be at least six months’ worth.

The bad news is that not everyone has an emergency fund, with 20% of employees saying they’ve saved nothing.

Student LoansOne of four employees (28%) has a student loan, with most (80%) making monthly payments up to $500. As one may expect, more Millennials (44%) have student loans. Still, one-quarter of Gen Xers (26%) also report student loans and 13% of Boomers report having them. Therefore, it is worth noting that all generations deal with student loans, whether for themselves or others.

Ideal emergency fund

Monthly Student Loan Payment

Has Student Loans

AllEmployees

EmergingMillennials

Under $250 $250–$499 $500–$749 $750+

EstablishedMillennials

AllMillennials

GenXers

Boomers

Actual emergency fund

21%

28%

41%

8%

2%

50%

40%

30%

20%

10%

0%

48%28% 44% 42% 26% 13%

52% 28% 13% 7%

20%

2%

33%

10% 10%

18%

7%

Aon Hewitt 43

“I know I should save, but I need help figuring out where.” (Continued)

How I Decide How Much to Save in My HSA and Retirement Plan*

HSAOf the one in three employees with a health savings account (HSA), half say they have a balanced approach to saving for health and retirement needs. Of respondents, parents (54%) are more likely to try to save the maximum allowed for both their HSAs and their retirement plans.

*Among those who are enrolled in a health savings account .

I figure out how much I need for each and put

some in each accordingly

Based on what I can afford, I put an equal amount in each

I save the maximum amount allowed in my

HSA and retirement plan

I save first in my retirement plan until I reach my annual goal,

then save in my HSA

I save only in my retirement plan

I don't really have a specific or regular plan

and decide as I go along

I save first in my HSA until I reach my annual goal,

then save in my retirement plan

I save only in my HSA

0% 10% 20% 30% 40% 50% 60%

33%

22%

15%

7%

4%

3%

11%

4%


Focusing On Near RetireesWith larger numbers of Boomers retiring now and in the coming years, employers are experiencing new challenges—70% of employers expect an increase in the number of retirement eligibles over the next three years.* This year’s study took a closer look at the near-retiree population—employees within three years of retirement.

Survey respondents in this group were asked additional questions about how they feel about retirement and the process they will soon be going through. This section includes the responses from 167 employees of the main survey population who indicated they were within three years of retirement. This subsegment includes 90% Boomers, 6% Gen Xers, and 4% Millennials, and comprises 46% men and 54% women.

*Aon Hewitt: 2016 Hot Topics in Retirement and Financial Well-Being

Aon Hewitt 45

6 in 10 want to maintain some relationship with employer

don’t think their retirement savings will be adequate

54%

56%have projected retirement income withdrawals


“I have no plans to move my retirement savings.”

Retirement Savings Plan Actions I Plan to Take When I Retire*

Of respondents within three years of retirement, four of 10 do not intend to move their retirement savings. The next highest response among this group was an expressed intent to consolidate their savings into an IRA or other savings vehicle.

*Among those nearing retirement .

0% 10% 20% 30% 40% 50% 60%

Do nothing; leave my money where it is 42%

Consolidate my retirement savings into another

retirement account or IRA30%

Consolidate my retirement savings into my company-

sponsored retirement account (rolling other savings in)

15%

Buy an annuity option 13%

Take a lump-sum withdrawal from my company-sponsored

retirement account12%

Opportunity

Educate your near retiree population about the options for their retirement savings when they retire, including leaving their money in the retirement plan that helped it grow, if applicable.

Aon Hewitt 47

“I have an idea of what to expect when I retire but could use better resources.”

Perceptions About Retirement (Percentage Who Agree)*

Strongly Agree/Agree Slightly Agree

Attitudes among these near retirees suggest that the majority have done some planning or preparation for the actual retirement process. Perceptions are somewhat less positive when they are seeking help from their employers—only one-half (52%) of near retirees felt that it was easy to find information and resources from their employer to help with the retirement process.


I know where to go at my company to get a question answered about

the retirement process66% 16%

I have a good understanding of how to use my savings

appropriately in retirement61% 19%

It's clear to me what happens to my employee benefits when I retire 60% 19%

I have a good understanding of how to start the retirement

process at my company58% 21%

It's clear what my company-sponsored retirement benefits

will be when I retire60% 19%

It's easy to find information and resources from my

employer to help me with the retirement process

52% 24%

I'm confident that I will have enough income in retirement to

meet my financial need46% 25%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


What Employees SayAbout the Retirement ProcessSeventy-one percent (119 of 167) of employees nearing retirement took the time to answer this question: “What is one thing you’d like your employer to do to help you navigate the retirement process?” Here is what we heard:

They want one-on-one assistance.

Employees are looking for personal attention

as they move toward retirement—they feel it is

important to have answers available as needed and

someone to talk to about their personal situations.

Learning sessions should be held regularly to share information and educate.

Both in-person and online channels appeal to

employees. A variety of channels is requested,

including in-person seminars, online training,

webinars, and workshops.

Employees are looking for more information about their retirement benefits and options.

They want clear, simple information and

resources they can trust.

Aon Hewitt 49

What My Employer Can Do to Help Me Navigate the Retirement Process*

Personalized Guidance Learning Sessions Clear/Trustworthy Information

“Hand holding.” “Provide retirement seminars!” “Be more transparent.”

“Help me figure out a way

to be able to retire without

being stressed out.”

“Have a seminar or online training.” “Give me specific details as

to what I need to do.”

“Meet with me one-on-one

to go over things.”

“Hold a seminar each year for

employees who are going to

retire and provide one-on-one

information if requested.”

“Send me brochures or

have an expert call me.”

“Sit down with me and

start communicating.”

“More classes.” “Spend more time

explaining things.”

“Be there to advise me along

each step of the way.”

“Provide webinars.” “Explain in layman’s terms.”

“Be more available when I have

a question.”

“Bring someone in from the

outside and do a class.”

“Make it clearer as to how the

funds are distributed.”

“More information on ways to

invest in good-quality funds.”

*Most frequently mentioned topics .


“Even though I’m retiring, I still want to be involved with my employer.”

Ideal Post-Retirement Relationship With My Employer*

While four of 10 soon-to-retire employees expect to cut ties with their organizations, the primary desire of those who do want to stay connected is opportunities to stay involved with short-term work projects and stay up to date on organizational news.


Be considered for short-term work projects

Become a member of the company's alumni program and/or social network (if it were available)

Get updates on what's happening at the organization

Volunteer in the organization's community efforts

I don't know

None—I don't expect to maintain any relationship except

as necessary for retirement savings plan requirements/

administrative purposes

Mentor or counsel current employees at my company

Other

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

29%

25%

16%

11%

7%

2%

42%

10%

Aon Hewitt 51


The Financial Wellbeing LensFinancial wellbeing is a hot topic for many employers. New this year, we asked questions focused on financial wellbeing and found that employees fall into different stages based on both attitudes and behaviors.

Aon Hewitt 53

What Is Financial Wellbeing?Financial wellbeing means to confidently manage your financial life today while preparing for the future and anything unexpected along the way.

Stage 1 SECURITY

Stage 2 FOUNDATION

Stage 3GROWTH

Stage 4FREEDOM

Focus Making sure I can cover expenses and reduce debt

Covering my expenses, managing debt, and building an emergency fund

Covering my expenses and managing debt while saving and investing for future needs

Planning to move into retirement in the near future and using savings for income

Need to Tackle • Day-to-day

expenses

• Debt management

• Understanding

income

• Taxes

• Establishing

savings goals

• Prioritizing goals

• Understanding

investments

and insurance

• Understanding of

investment vehicles

• Managing asset

growth

• Achieving goals

• Retirement income

• Estate planning

• Understanding

Social Security

Common Mistakes • Overspending

• Not saving

• Not seeing

big picture

• Under-saving

• Backtracking

• Only focusing

on market risk

• Leakage

• Cashing out or

rolling out without

researching

• Underestimating

life expectancy


“What stage am I in?”

Financial Wellbeing Stage

Several financial indicators help determine one’s personal financial wellbeing stage. While age may have some influence on financial stage, it is clear that people can fall into any stage regardless of age or generation. The same can be said for household income. One indicator in which we did see a strong influence was financial literacy; those with lower financial literacy were more likely to select Security or Foundation and those with higher financial literacy were more likely to select Growth or Freedom.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

All

Emerging Millennials

Established Millennials

Gen Xers

Boomers+

1%43%

30% 25% 36% 9%

30% 26%

32% 29% 37%

31% 26% 40%

24% 18% 36% 22%

Household Income < $35,000 $35,000–$64,999 $65,000–$99,999 $100,000 or more

Security 45% 36% 26% 25%

Foundation 29% 28% 25% 21%

Growth 23% 30% 40% 43%

Freedom 4% 7% 9% 12%

Financial Literacy Higher Financial Literacy Lower Financial Literacy

Security 23% 39%

Foundation 22% 28%

Growth 45% 28%

Freedom 11% 6%

2%

3%

Security Making sure I can cover expenses and reduce debt

Growth Covering expenses, managing debt, saving and investing for future

Foundation Covering expenses, managing debt, and building an emergency fund

Freedom Planning to move into retirement in the near future and using savings for my income

Aon Hewitt 55

“I want help specific to where I am now.”

Most Helpful Services My Employer Could Provide (Most Often Ranked 1, 2, or 3)

Not surprisingly, while there is overlap on the most popular tools and resources employees would like from their employers, we see that employees in the four financial wellbeing stages place varying degrees of value on them.

Interestingly, DIYers are somewhat more likely to fall into the Freedom and Growth stages and Do-It-For-Mes to fall in Security and Foundation. (For more on DIYers, see page 36.)


Rank: 1 Access to personal

investment advisor

54%

Access to personal

investment advisor

56%

Access to personal

investment advisor

66%

Seminar (in-person

or online) on

retirement planning

71%

Rank: 2 Credit counseling

46%

Seminar (in-person

or online) on

retirement planning

49%

Seminar (in-person

or online) on

retirement planning

62%

Access to personal

investment advisor

58%

Rank: 3 Financial information

and/or advice website

45%

Financial information


49%



48%



49%

Opportunity

Make sure that you are offering a range of financial tools and services for employees in all stages.


“I’m afraid of running out of money.”

Beliefs About Retirement

Strongly Agree/Agree Slightly Agree Slightly Disagree Strongly Disagree/Disagree

Many employees have pessimistic views of retirement, with most (70%) being afraid they will run out of money during retirement. However, Boomers, who are closest to retiring, feel less pessimistic than Gen Xers or Millennials. In addition, those with higher household income levels reflect more confidence regarding their retirement goals. Those in the Security and Foundation stages reflect the most pessimism.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

I'm afraid I'll run out of money

during retirement

2016

2016

2016

2015

2015

2015

I can't possibly save as much money each

year as the retirement planning tools say I will need in order to have a comfortable retirement

There is no way I'll be able to retire at

the age I want

N/A

42% 27% 13% 18%

38% 24% 16% 23%

34% 24% 19% 24%

27% 21% 20% 32%

21% 21% 24% 35%

Aon Hewitt 57

“I’m afraid of running out of money.” (Continued)


Beliefs About Retirement by Financial Wellbeing Stage

Significantly Lower Than Other Stages Significantly Higher Than Other Stages

Strongly Agree/Agree Security Foundation Growth Freedom

I’m afraid I’ll run out of money during retirement 57% 48% 32% 19%

I can't possibly save as much money each year as the retirement planning tools say I will need in order to have a comfortable retirement

57% 41% 23% 23%

There is no way I'll be able to retire at the age I want 43% 28% 17% 10%


“As I move into later financial wellbeing stages, I realize I will need more for retirement.”

Amount I Need to Save to Live Comfortably by the Time I Retire


When we asked employees how much they will need to live comfortably in retirement, the mean response was $937,600, with 48% thinking they will need less than $1 million and only 38% thinking they will need more than that.

When we looked across the financial wellbeing stages, we found that those in Growth and Freedom tended to think they would need more, while those in Foundation and Security thought they would need less.

0% 5% 10% 15% 20% 25% 30%

Under $100,000

5%

2%5%

5%

$100,000–$249,999

12%

7%8%

10%

$250,000–$499,999

14%

13%17%

12%

$1,000,000–$1,499,999

13%

21%18%

21%

$1,500,000 or more

17%

26%14%

25%

$500,000–$999,999

20%

22%19%

23%

Aon Hewitt 59

Who Responded?Aon Hewitt partnered with Kantar Futures to conduct the Financial Mindset® Study for the second consecutive year. From May 24 to June 3, 2016, 2,007 U.S.-based employees working in companies with over 1,000 people completed the online survey.

Aon Hewitt 59


Gender Age

Male51%

Boomers33% Millennials

32%White79%

African-American9%

Hispanic/Latino(a)10%

Asian6%Other 2%

Prefer not to say <1%

Multi-racial 2%

American Indian or Alaskan Native 1%

Gen Xers35%

Female49%

18–245%

65+4%

25–3422%

55–6421%

35–4423%

45–5425%

Generation Race/Ethnic Identity

Aon Hewitt 61

Region Family Status

West20%

Not a Homeowner33%

South36%

Northeast20%

Homeowner67%

< $35,00011%

$35,000–$64,99925%

$65,000–$99,99930%

$100,000 or more34%

Single,no child(ren)24%

Single,with child(ren)12%

Married/domestic partnership, no child(ren)

18%

Married/domestic partnership, with child(ren)

45%

Midwest25%

Homeowner Household Income


Personal Income Employment

< $35,00026%

$35,000–$64,99936%

5,000–9,99921%

10,000–24,99918%

25,000 or more32%

1,000–1,99910%

High school graduate or less

11%

College graduate/undergraduate degree

42%Some advanced/post-graduate

education4%

Advanced/post-graduate degree

20%

Some college24%

2,000–4,99919%

$65,000–$99,999

23%

$100,000 or more15%

Part-time (less than 30 hours per week)11%

Full-time (30 hours or more per week)89%

Company Size (number of U .S .-based employees) Education

Aon Hewitt 63

Defined contribution retirement plan that allows for your contributions (e.g., 401(k), 403(b), 457, or Roth-type plans) 74%

Employer-matching contributions to a defined contribution retirement plan 54%

Defined benefit or pension type plan 19%

Automatic/nonmatching employer contributions to a defined contribution retirement plan (e.g., profit sharing) 12%

Other 2%

None 8%

5% or less 43%

6% – 10% 37%

11% – 15% 10%

16% – 20% 6%

21%+ 5%

Tenure High-Level Industry

<215%

Manufacturing and energy

12%

Financial services and insurance

9%

Health care13%

Public sector22%

Business services and construction12%

Utilities and telecommunications

4%

Internet, media, entertainment, and leisure

5%

Retail and wholesale

trade23%

2–420%

5–922%

10–1416%

15+27%

Retirement Savings Plan/Features Available to Me Through My Employer

How Much I Contribute to My Employer’s Retirement Plan (Percentage of Pay)


Aon Hewitt’s Mindset Research

The Financial Mindset® Study is one of three studies in Aon Hewitt’s Mindset research, which also includes the Consumer Health Mindset™ Study and Workforce Mindset™ Study. Our suite of research provides a comprehensive view across financial, health, and talent to help our clients understand the total employment experience.

aon.com/financialmindset

Consumer Health Mindset™ StudySince 2010, this study has explored American health care consumers’ (employees and dependents) perspectives, attitudes, and behaviors toward health and health care as they interact with their employer-sponsored health plans and wellness programs.

aon.com/consumerhealthmindset

Workforce Mindset™ StudyThis study addresses the many factors that shape the employee experience, including workplace characteristics and differentiators, total rewards, performance, and pay. Findings provide insight into how employees view their work experience and what employers can do to better deliver on and communicate about meaningful aspects of the work environment.

aon.com/workforcemindset

Heather [email protected]

Ray [email protected]

Nicole [email protected]

Christin [email protected]

Aon Hewitt gratefully acknowledges the contributions

of others who made this report possible, including

Rob Austin, Kenje Mallot, Beth Boden, Alison Borland,

Jim Hoff, and Laura Morin, as well as the team from

Kantar Futures.

Aon Hewitt empowers organizations and individuals to secure

a better future through innovative human capital solutions . We

advise, design and execute a wide range of solutions that enable

our clients’ success . Our teams of experts help clients achieve

sustainable performance through an engaged and productive

workforce; navigate the risks and opportunities to optimize

financial security; redefine health solutions for greater choice,

affordability and wellbeing; and help their people make smart

decisions on managing work and life events . Aon Hewitt is the

global leader in human resource solutions, with nearly 34,000

professionals in 90 countries serving more than 20,000 clients

worldwide across 100+ solutions .

For more information on Aon Hewitt,

please visit aonhewitt.com.

About Aon Hewitt

Contacts

Risk. Reinsurance. Human Resources.

About Aon Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources.

Visit www.aon.com for more information about Aon, and visit aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.

© Aon plc 2016. All rights reserved.

2016 Financial Mindset Study - Aon · 2016 Financial Mindset ® Study ... and health care; ......

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