Many nonprofit workers are worried that they won’t have enough money to retire comfortably, according to initial results released today of a survey about financial security among nonprofit employees. The early findings were presented at the annual Independent Sector meeting in Chicago.
That concern is prompting some employees to consider leaving the nonprofit world, says the study, which was conducted by the TIAA-CREF Institute, an arm of the retirement-fund giant, and Independent Sector.
The telephone survey of 1,000 people found that only 18 percent say they are very or extremely confident that they’re putting aside enough money for retirement. About 45 percent reported that they have considered taking jobs outside the nonprofit world because of financial concerns, including retirement.
“There is a significant level of concern, particularly among early- and mid-career employees, around issues of financial security,” said Roger Ferguson, president of TIAA-CREF, who unveiled the survey results today.
But the news wasn’t all bad: Roughly three-quarters of those surveyed said they had access to a retirement plan, a higher share than in the business world. And 76 percent of nonprofit workers in the survey are putting some money aside for retirement, even if they don’t believe they’re saving enough.
Mr. Ferguson urged nonprofit leaders to find ways to help their workers better prepare for retirement. Among his suggestions: Automatically enroll new workers in retirement plans; provide regular mandatory sessions on financial literacy for workers, and contribute directly to employees’ retirement plans, rather than putting the entire burden fall on the worker. Mr. Ferguson said he recognized that, for smaller, cash-strapped nonprofits, that last option might be “a stretch.”
Of those surveyed, 69 percent had access to “defined-contribution plans,” such as 403(b)s, a plan nonprofits can create to allow employees to set aside retirement money before taxes. About 30 percent had access to “defined-benefit plans,” which require employers to pay specific amounts per year to retired workers.
A nonprofit chief executive in the audience asked Mr. Ferguson if the charity world was “kidding itself” in thinking that 403(b) and 401(k)-type plans, combined with Social Security, would provide enough money to enable employees to retire comfortably.
Because such plans depend heavily on employees putting money aside, and on investment returns, they are often thought of as less secure than traditional pension plans.
Mr. Ferguson said that nonprofits don’t need to return to traditional pension plans—but workers need to contribute at least 10 percent of their paychecks a year to be sure they have enough for retirement.
His reminder to nonprofit chief executives: “Many of us think about how we can afford our mission, but we as CEO’s also have a responsibility to think about the business side of our missions.”
Complete results from the survey will be released this spring.