A new report released today by the Center for State and Local Government Excellence and the TIAA-CREF Institute finds that only 18 percent of full-time public-sector workers are very confident about their retirement income prospects, down from 21 percent in 2012. In particular, many public-sector workers also express concern about retiree healthcare costs, future benefits from Social Security and Medicare, and their own saving and investing for retirement.

The report – the 2014 Retirement Confidence Survey of the State and Local Government Workforce – surveyed more than 1,200 state and local government employees across the nation, including public educators, police officers and firefighters. It updates information from the 2012 Retirement Confidence Survey of the State and Local Government Workforce.

“Public servants should be able to devote their full attention to the important work that they do for our communities,” said Paul Yakoboski, senior economist with the TIAA-CREF Institute. “But the reality is that while state and local governments address pension reform in the wake of the 2008-2009 recession, public employees can address ‘reform’ of their personal planning and saving for retirement.”

“Fewer local and state governments offer retiree health care and public employers also are shifting more health costs to employees and retirees,” said Joshua Franzel, Center for State and Local Government Excellence vice president of research and co-author of the report. “This reality has reduced public workers’ confidence in these benefits and raises new questions about how much they need to save for health expenses in retirement. In such an environment, it is important for all state and local workers to take advantage of financial education and planning resources as well as available savings opportunities.”

Highlights from the report include the following:

• Virtually all full-time state and local workers are covered by some form of retirement plan offered by their employer, but only 39 percent are very confident that they will receive all of the benefits that they have earned in retirement.
• In comparison to 2012, when 72 percent of respondents expected to work for pay after retiring, the figure has dropped to 49 percent in 2014.
• While 2014 confidence levels in overall retirement income prospects are generally consistent with 2012 (18 percent are very confident and 56 percent somewhat confident), there was a decrease in the proportion of public-sector employees who are either very confident or not at all confident. This year’s survey also revealed a 7 percentage-point shift of K-12 teachers from very confident to somewhat confident about their retirement income prospects.
• Public-sector workers are concerned about federal retirement income security programs. Only 7 percent of state and local government employees are very confident that the Social Security system will continue to provide benefits of at least equal value to the benefits received by retirees today, while 55 percent are not confident. The same goes for Medicare benefits, with 6 percent reporting they are very confident and 52 percent saying they are not confident.
• In 2012, 51 percent of retirement savers in the public-sector workforce said they received retirement planning advice from a professional financial advisor within the past three years. In 2014, only 38 percent reported receiving advice. But this year’s report suggests more individuals are following all the investment advice they receive. For example, 24 percent reported following all the investment advice received in 2014 vs. 18 percent in 2012.

A summary of the research and full survey results can be downloaded here.

About the study

To examine retirement planning and saving among full-time state and local government employees and their confidence about their retirement income prospects, Mathew Greenwald & Associates (MGA) surveyed 1,263 individuals working in state and local government by telephone in April 2014. Of those surveyed, 507 were K-12 teachers, 102 were firefighters, 153 were police officers and 501 were in other occupations. Responses were weighted to be representative of the aggregate public-sector workforce. The survey questionnaire was developed from the framework of the annual Retirement Confidence Survey sponsored by the Employee Benefit Research Institute (EBRI) and MGA.

About The Center for State and Local Government Excellence

The Center for State and Local Government Excellence helps state and local governments become knowledgeable and competitive employers so they can attract and retain a talented and committed workforce. The Center identifies best practices and conducts research on competitive employment practices, workforce development, pensions, retiree health security, and financial planning. The Center also brings state and local leaders together with respected researchers and features the latest demographic data on the aging workforce, research studies, and news on healthcare, recruitment and succession planning on its website, www.slge.org.

About the TIAA-CREF Institute

The TIAA-CREF Institute (www.tiaa-crefinstitute.org) helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The Institute conducts in-depth research, provides access to a network of thought leaders, and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success.

About TIAA-CREF

TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $613 billion in assets under management (as of 6/30/2014) and is the leading provider of retirement services in the academic, research, medical and cultural fields.

TIAA-CREF Institute is a division of Teachers Insurance and Annuity Association (TIAA), New York, NY.
© 2014 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF), 730 Third Avenue, New York, NY 10017.

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