New MissionSquare Research Institute report finds that less-tenured public sector employees face greater concerns about retirement readiness

A new research report from the MissionSquare Research Institute (the Institute) reveals key factors contributing to retirement readiness among public sector employees, including how employee tenure affects overall financial confidence. The report, titled “What Helps Public Sector Workers Feel Ready for Retirement? An In-Depth Study by Job Tenure, and Other Factors,” was co-authored by Zhikun Liu, Ph.D., CFP^®, vice president, head of the MissionSquare Research Institute, and Richard Stebbins, Ph.D., J.D., CFP^®, assistant professor of Consumer Science at the University of Alabama.

According to the research, while a majority (81%) of full-time state and local government workers are worried about having sufficient funds to last throughout their retirement, employees with 20 or more years of service expressed less concern about factors such as emergency savings, the ability to retire on time, and the overall costs of living in retirement compared to their less-tenured peers.

“Several factors may influence retirement readiness for workers, including one’s income and access to financial education and employer-sponsored retirement plans,” said Dr. Liu. “While all employees can benefit from robust retirement planning resources, our research highlights the importance of providing targeted support to those less-tenured workers who may often face greater financial uncertainty as they plan for retirement.”

Financial concerns vary significantly by tenure

The Institute’s report outlines notable differences in retirement-related concerns across tenure groups, indicating opportunities for employers to offer practical and targeted strategies to enhance retirement readiness:

• Emergency savings: More than three-quarters (77%) of employees with less than 10 years of service are worried about their emergency savings, compared to those with 10 to 19 years (71%) and those with 20 or more years of service (64%).

• Having enough money to last throughout retirement: More than 81% of employees with less than 19 years of service have concerns about having enough money to last throughout retirement, compared to 76% of those with 20 or more years of service.

• Ability to retire on time: 77% of employees with less than 10 years of service and 74% with 10 to 19 years of service have concerns about retiring on time, compared to only 63% of those with 20 or more years of service.

Strong demand for financial education, but priorities differ by tenure

Additional research from across all employee groups showed that most (65%) of the respondents expressed an interest in wanting financial education from their employers. However, the specific topics of interest differ based on the unique career stages of employees. Specific areas of financial education include:

• How much to save: Most employees with fewer than 20 years of service were most interested in learning how much they should save before retiring (69% of those with 0 to 9 years and 66% of those with 10 to 19 years).

• Tax implications: Those with 20 or more years of service (64%) showed more interest in understanding the tax implications of their retirement plans compared to over half (54%) of employees with 0 to 9 years and those with 10 to 19 years (57%) of service.

“A financially prepared workforce is a more engaged and resilient workforce,” added Dr. Liu. “By addressing the needs of the workers detailed in our research, employers and policymakers can help craft effective retirement strategies that support employees across all stages of their careers.”

Survey methodology

The Institute partnered with Greenwald Research to survey 1,009 full-time state and local government workers between Sept. 13 and Oct. 4, 2024. Respondents provided information about their current financial situation, retirement plans, and preferences for various factors that could enhance their retirement readiness. The survey results were analyzed in the context of workforce demographics, retirement preparedness, and the challenges public sector employees face in achieving financial security.

About MissionSquare Research Institute

MissionSquare Research Institute promotes excellence in state and local government and other public service organizations to attract and retain talented employees. The organization identifies leading practices and conducts research on retirement plans, health and wellness benefits, workforce demographics and skill set needs, labor force development, and topics facing the nonprofit industry and education sector. MissionSquare Research Institute brings together leaders and respected researchers. More information and access to research and publications are available here.

About MissionSquare Retirement

Since its founding in 1972, MissionSquare Retirement has been dedicated to simplifying the path to retirement security for public service employees. As a mission-based financial services company, we manage and administer over $72.0 billion in assets.* Our commitment to delivering results-oriented retirement plans, education, investments, and personalized advice sets us apart. Explore how we enable public service workers to build a more secure financial future. For more information, visit www.missionsq.org.

*As of Dec. 31, 2024. Includes 457(b) plans, 401(a) plans, 403(b) plans, Retirement Health Savings plans, Employer Investment Program plans, affiliated IRAs, and investment-only assets.

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