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Worry, but Not Panic

Worry, but Not Panic
September 17, 2009

The economic collapse of the last year has left many academic employees worried about how they will afford retirement. But despite evidence of these fears, as documented in a survey by TIAA-CREF, shifts in retirement strategies have been relatively modest. Majorities of those surveyed -- 1,002 academic employees aged 50-70 -- have not changed how much they save for retirement or their asset allocations.

"There was no panic here," said Paul J. Yakoboski, principal research fellow at the TIAA-CREF Institute. "There was a calm, reasoned response."

At the same time, the survey suggests that many employees in higher education may well delay retirement plans -- as many are worried both about having enough money and having adequate health coverage.

Asked if they were concerned about outliving their savings, 22 percent said that they were very concerned, 43 percent said that they were somewhat concerned, 22 percent were not very concerned, and 13 percent were not concerned at all. The levels of concern were even higher when respondents were asked about worries over affording good health care in retirement, with 42 percent saying they were very concerned, and 29 percent reporting that they were somewhat concerned.

Yakoboski said that these levels of concern are high enough to suggest that they will affect when people retire.

On both sets of questions, administrators and staff members are much more worried than are faculty members. Yakoboski said that typically, he expects similar attitudes, given that many administrators started out as faculty members, and plenty of faculty members have served as administrators. He said he wasn't sure why the gap existed, and speculated that it may be that many faculty members plan to continue working well after traditional retirement age, and so will not need to shift to supporting themselves on retirement savings and benefits in the near term.

Here are some of the comparisons:

Concern About Outliving Savings

  All Age 50-64 Age 65-70 Faculty Staff Administrators
Very concerned 22% 23% 18% 13% 29% 29%
Somewhat concerned 43% 44% 37% 47% 44% 34%
Not too concerned 22% 21% 26% 27% 16% 23%
Not at all concerned 13% 12% 19% 13% 11% 14%

Concern About Being Able to Afford Good Health Care in Retirement

All Age 50-64 Age 65-70 Faculty Staff Administrators
Very concerned
42%
45%
22%
32%
52%
46%
Somewhat concerned
29%
29%
34%
32%
31%
22%
Not too concerned
17%
17%
22%
23%
10%
18%
Not at all concerned
11%
10%
22%
14%
7%
14%

Because the survey was prompted by last year's Wall Street drops, TIAA-CREF does not have comparable figures from other periods to allow for comparisons now and in the past.

While academic employees are worried, they are not rushing to change their retirement savings plans. Asked if they were changing the amount they save for retirement as a result , only 24 percent said Yes. And of those who are changing how much they save, 61 percent said that they were saving more while 39 percent said that they had decreased the amount they were saving.

In terms of asset allocations, most of the academic employees surveyed are not changing strategies. But of those who are, there was clear movement away from stocks and mutual funds.

Percent Changing Asset Allocation Due to Changes in Economy and the Markets

  All Age 50-64 Age 65-70 Faculty Staff Administrators
Making a Change 41% 41% 38% 37% 46% 41%
No Change 59% 59% 62% 63% 54% 59%

Of Those Making Changes, Percentages Increasing or Decreasing Investments in Stocks and Mutual Funds

  All Age 50-64 Age 65-70 Faculty Staff Administrators
Increasing stock holdings 17% 16% 21% 18% 15% 16%
Decreasing stock holdings 83% 84% 79% 82% 85% 84%

 

 

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