University‐Provided Retirement Planning Support and Retiree Financial Satisfaction During Retirement: Differences by Gender, Job Classification, and Planning Behavior

ABSTRACT Sound financial planning and financial advice is necessary to achieve retirement income adequacy. The shift from defined benefit to defined contribution pension plans and the recent bankruptcy of Enron Corporation underscore the importance of managing retirement accumulation and liquidation risks. This study analyzes the effectiveness and adequacy of institutional-provided information and advice on employees' retirement planning decisions and their satisfaction with financial resources during retirement. Results suggest that retirement planning should begin earlier in an employee's career and that employer-provided retirement information and advice is a highly valued service. Gender, planning practices, job classification, and age are all significant predictors of satisfaction with financial resources during retirement. Targeting women and union employees with retirement information and advice that focuses on allocating contributions using a balanced portfolio approach should result in significant increases in satisfaction with financial resources during retirement. Regulatory objectives should focus on reducing retirement accumulation and liquidation risks, improving the delivery of professional financial advice to plan participants, and expanding qualified retirement plan choice for all labor force participants. To encourage employer participation in employee retirement planning, employers acting in "good faith" should be federally protected from liability for providing retirement planning information and advice to employees. INTRODUCTION The overall purpose of this study is to investigate the use of various sources of retirement information, employee efforts in planning for retirement, impact of planning on financial status during retirement, and retiree satisfaction with their financial resources during retirement for a sample of retired university employees. Furthermore, the study explores differences in the above listed behaviors by gender, job classification, and time of retirement. This article contributes to the growing body of knowledge on retirement planning and satisfaction with financial resources by describing actual retirement planning behavior, and by showing relationships between retirement planning behavior and satisfaction during retirement. This study also will add to our current knowledge the differences in these behaviors by gender, employee class, and time of retirement. Because the data for each stratum were organized by employee classes and analyzed in four groups by years since retirement, we are able to determine the effect of retirement decisions over a long period of time and for various classes of employees. To the best of our knowledge, this approach has not previously been used in studies of this type. From a practical perspective, the results of this study can be used to determine effectiveness and adequacy of institutional-provided education/information to prepare employees to make retirement decisions, and the implications of retirement accumulation and liquidation decisions on an employee's long-term financial stability. While there are limits1 to the generalizability of our results, base line data provided could be used by other organizations that are trying to answer similar retirement questions. Our findings are particularly relevant for universities that use TIAA-CREF. Plan participant investment choices have been expanded substantially during the decade of the 1990s and in October of 2002 a group of mutual funds were rolled out by TIAA-CREF, which will make retirement planning decision making even more complex. Consequently, university-provided retirement planning support has become even more important. Additionally, insurers, legislators, regulators, and others interested in reducing information asymmetry during the accumulation and liquidation phases of choice-based (defined contribution) retirement planning should be interested in these results. …