Workers Identify Themselves as Savers and Spenders, But Not Investors

BOSTON, January 10, 2008 - Fidelity Investments today announced results from research on employees of nonprofit organizations that shows nearly one-third (29 percent) increased their contributions to their workplace savings plans in 2007, and roughly six out of 10 (57 percent) increased their retirement readiness through higher levels of planning and interaction with their plan provider. However, almost half (44 percent) reported personal debt levels exceeding $5,000, not including mortgage commitments.

The firm's second major study on employees in the tax-exempt sector sheds new light on the savings attitudes and behaviors of workers in healthcare, education and government. As part of the study, workers were asked to classify themselves in one of three categories - "investors," "savers" or "spenders." One in 10 workers (9 percent) identified themselves as investors, while the majority classified themselves as savers (46 percent) or spenders (45 percent).

"When we looked at the 'investor' profile we saw less personal debt, better financial habits, and greater activity in managing their workplace retirement savings," said John Begley, executive vice president, Fidelity Investments.

For example, people who identified themselves as either an investor or saver were more than twice as likely to have less than $1,000 in debt, as compared to spenders (40 percent vs. 13 percent). Overall, one-in-four (26 percent) have less than $1,000 in debt.

In saving for retirement and contributing to their workplace savings plan, almost one-third (29 percent) of workers in tax-exempt organizations reported increasing their contribution amount in 2007 over 2006 levels. Yet the numbers were highest among investors. Four in 10 investors (42 percent) contributed more to their plan in 2007 than in 2006, as compared to one in three savers (30 percent) and one-quarter of spenders (25 percent).

"It's critically important that every tax-exempt worker begins to behave more like an investor, and take those first steps toward actively managing savings to help secure a financial future," said Begley. "For example, if you are a spender, you can start by using one of Fidelity's online calculators to determine how much you should be saving. If you are a saver, using the online tools to evaluate your asset allocation strategy can help you get more engaged in your plan and help make better investment decisions."

Research results showed that too few workers in tax-exempt organizations are taking full advantage of their workplace savings plan resources. Fidelity found that over half (57 percent) interacted with their defined contribution (DC) plan provider in the past year, mostly to conduct a regular plan review with a representative (31 percent) or to reallocate funds (14 percent). However, significantly more investors (77 percent) interacted with their DC plan provider compared to savers (58 percent) and spenders (51 percent). Investors also seem to be more confident in their preparedness with nearly eight out of 10 (79 percent) knowing how much they need to save annually to reach their retirement goal compared to almost four in 10 spenders (38 percent) and six in 10 savers (60 percent).

Investing in lifecycle funds is another way employees can take positive action when saving for retirement through their workplace savings plan, especially if they are not actively rebalancing their portfolio. However, the research results showed that only a small number of spenders (14 percent) and savers (17 percent) are using these funds with the greatest usage by investors (25 percent).

Utilizing Tools for Better Investing

Workers can become better educated investors by taking advantage of all of the resources available through their employer as well as through their retirement plan provider. Employees with a workplace retirement plan provided by Fidelity can access easy-to-use investment tools and informational resources online, by phone, or in-person with a Fidelity representative. Through the firm's NetBenefits^® Web site (www.NetBenefits.fidelity.com), Fidelity helps nearly 3 million workers in the nonprofit sector learn about building a retirement plan and estimating monthly savings needs, understand the investment options available through their plan, access timely reports on market trends, or hear from professionals about how to pay down debt and invest for the future. These and other tools can help workers gain the confidence necessary to not only save for retirement, but to actively invest for their financial future.

Workers Questioning Viability of Benefits

The Fidelity study also looked at the types of benefits currently being provided to employees in the tax-exempt sector. In addition to their DC plan, many tax-exempt sector workers report having health insurance benefits (97 percent) and life insurance (89 percent), and just over half indicate they have access to a pension (55 percent).

Nearly half (49 percent) report having retiree health benefits, but three out of four (73 percent) are concerned this benefit will be reduced or discontinued in the future. Many workers (43 percent) plan to work longer and retire later to compensate, however, 41 percent admit they have not given it adequate thought.

"Given the shift in retiree benefits and the rising costs of healthcare, employees can't afford to delay taking action to plan, save and invest for their financial future," said Begley. "Working in retirement should be a decision based on choice rather than necessity."

About The Study

Fidelity Investments Tax-Exempt Savings Study was conducted to measure tax-exempt sector workers' attitudes and behaviors toward spending, saving, and investing for retirement. The study was conducted by Richard Day Research, an independent research firm, among 1,524 current employees with DC plan accounts across tax-exempt sectors, including higher education, health care, government, foundations, and faith-based organizations. The survey was fielded online in November 2007.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $3.4 trillion, including managed assets of $1.6 trillion as of November 30, 2007. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to 24 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity Brokerage Services LLC, Member NYSE, SIPC,
100 Summer Street, Boston, MA 02110

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