While they give themselves a ‘B’ grade in financial literacy, more than one-third feel like beginner investors
BOSTON, April 3, 2017 /BUSINESS WIRE/ — College professors take great pride in helping students learn new concepts, yet according to Fidelity Investments’ 2017 Higher Education Faculty Study, when it comes to grading their own financial literacy— from budgeting to investing— this group of educators admit they’d give themselves a “B” grade. So what’s keeping them from that “A” grade?
While professors feel comfortable with many fundamental financial concepts, there are other areas where extra study is needed. For example, nearly one third (29 percent) of professors aren’t sure of the investment mix of their retirement savings, suggesting they don’t know if the investments they selected align to a specific financial goal and timeline.
Encouragingly, as faculty members age, their financial wisdom increases slightly: Boomer professors (born 1946-1964) give themselves a “B+” grade.
The study identified three important insights on how educators feel about their financial knowledge and areas where they would welcome help:
- Despite Advanced Degrees, Many Professors Feel Like Novice Investors: While they have mastered certain subjects in their professional lives, when it comes to investing, 37 percent of professors see themselves as “beginners.” Not surprisingly, this sentiment is greater for younger professors with 47 percent of Gen X faculty (born 1965-1980) feeling inexperienced.
- Worried Retirement Savings Won’t Make the Grade: While saving for retirement is the top financial priority for professors (42 percent), and their reported average total savings rates for retirement (employee + employer contributions) is a strong 15 percent, more than half (54 percent) of faculty members are concerned that they could outlive their retirement savings. There is a need to be more engaged, and to do so as early in their careers as possible.
- Extra Help Needed: When asked about where they need financial help, the top responses for professors are understanding Medicare/health care costs (34 percent) and choosing specific investments (32 percent).
“It’s encouraging that saving for retirement is a top priority for many in higher education, and they recognize they need to improve their level of financial knowledge,” said Alexandra Taussig, senior vice president, Fidelity Investments. “Whether their careers are in the early stage or they are approaching retirement, Fidelity is committed to helping professors — and all of those who work in higher education — feel more confident with their investment decisions so they can address their financial health and retirement needs.”
Non-Faculty Members Strong Savers, but Still Struggling with Debt
Fidelity’s research finds that the broader higher education community wants help assessing their overall and day-to-day financial picture in addition to retirement savings. When it comes to the financial wellness of non-faculty employees, 64 percent say they often worry about their financial situation, compared to 44 percent of professors.
Furthermore, while professors prioritize saving for retirement, non-faculty members’ top saving priority is paying off debt (38 percent), followed by paying daily/monthly household expenses (24 percent) – suggesting these employees are more likely to have more immediate financial challenges. Despite that, non-faculty members are still actively saving for retirement – with a reported total savings rate of 13 percent – which is close to Fidelity’s rule of thumb to contribute 15 percent of your annual salary (including employer contributions) toward retirement.
Assessing Your Financial Picture – Identifying Next Steps
Regardless of where a professional is on their financial journey, there are many resources available to help improve one’s financial readiness. Both faculty and non-faculty members say they feel confident they will have enough money to pay for basic expenses in retirement – 87 percent for professors and 80 percent for non-faculty members. Yet there are opportunities to build upon this progress, learn more, and get help from a financial professional when needed.
Fidelity offers extensive resources through the workplace including an online Planning & Guidance Center and a comprehensive Financial Wellness solution to help employees better understand how to tackle life’s financial challenges. Additionally, Fidelity has a range of resources available that address the specific areas professors say they need help:
- Getting the Most out of Medicare helps break down the basics of Medicare and provide answers to questions about eligibility, types, costs and when and how to sign up
- Make the Most of Social Security covers the important steps to help you learn how to maximize your Social Security benefit when developing your retirement plan
- For faculty nearing retirement, Top Ten Things to Do Before You Retire explains ten important steps you can take that can help you create or refine your retirement income plan
And for all employees looking to address their overall financial wellness, Fidelity Viewpoints address a range of topics, including: “How to pay off debt — and save, too,” “6 tax-smart savings tips,” and “The pros’ guide to diversification.”
For additional information about Fidelity’s 2017 Higher Education Faculty Study, please check out the info-graphic.
Fidelity’s Services for the Tax-Exempt Market
Fidelity serves the most plan participants in the not-for-profit workplace retirement savings market, which includes health care, higher education, research, foundations, faith-based, K-12 and other tax-exempt organizations. Fidelity’s comprehensive suite of workplace retirement services includes plan design resources, record-keeping services, consulting and participant communication, education and guidance. With retirement planning professionals and an array of tools and resources to educate plan sponsors, Fidelity helps employers in the tax-exempt market maximize retirement benefits plans and increase employee retirement readiness.
About the Study
The Fidelity Investments® Higher Education Faculty Study was conducted by Versta Research, an independent firm based in Chicago, November 3–18, 2016, among 1,000 benefits-eligible employees who work at U.S. 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 sample included 348 employees at private institutions and 652 employees at public institutions, of whom 203 were employed at two-year institutions and 797 were employed at four-year institutions; of the 1,000 employees, 375 were faculty. Versta Research is not affiliated with Fidelity Investments.
About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $6.0 trillion, including managed assets of $2.2 trillion as of February 28, 2017, we focus on meeting the unique needs of a diverse set of customers: helping more than 26 million people invest their own life savings, 23,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit here.