:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1339045508-ed7922bf3e2f434f9f137d907afa81f9.jpg)
Retirement planning is a critical concern for public-sector workers, yet many are unsure of how to effectively plan for the future.
A report from MissionSquare Research Institute—which surveyed more than 1,000 state and local government employees—shows that major gaps in savings strategies, benefit awareness, and financial education leave workers feeling underprepared.
And these issues stem not from a lack of effort, but from a lack of clear guidance and support. With the right tools and resources as well as personalized advice, these obstacles can be overcome, empowering workers to make more informed decisions.
Key Takeaways
- Public-sector workers feel underprepared for retirement due to a lack of education, guidance, and support.
- Many workers don’t know how much to save, lack a clear spending strategy, and are unaware of what benefits are available to them at different stages of their careers.
- Improving retirement readiness requires access to tools and resources, personalized advice, and financial literacy.
What They Get Wrong
Public-sector workers face major gaps in their retirement planning, but this isn’t because they don’t care. The problem stems from a lack of guidance and support, along with widespread misconceptions that leave them underprepared for their financial future.
“Many public-sector employees enter retirement planning with good intentions but are often misinformed or underprepared due to a range of common misconceptions,” said Matt Harris, safe money analyst at Red Stone Retirement.
For starters, they struggle with knowing how much they need to save for retirement, which leaves them uncertain about whether they’re on track to meet their future financial needs. The MissionSquare report highlights that 67% of public-sector employees need guidance in determining the right savings target. That is apparent in the common assumption that a pension alone will be enough.
“One widespread misunderstanding is the assumption that a pension alone will fully cover retirement expenses. While pensions can be a significant asset, they are rarely sufficient by themselves, especially when factoring in inflation, rising healthcare costs, and longer life expectancy,” Harris said. “Some workers also mistakenly believe that Social Security benefits will mirror their current income or kick in at full value without delay or planning.”
MissionSquare’s report also notes a lack of retirement spending strategy as a problem, with over 15% of respondents having no clear plan for drawing down their savings in retirement. Additionally, many are confused about how taxation works for retirement withdrawals.
Workers also face uncertainty when it comes to identifying which benefits are most relevant at different stages of their careers, which can lead to missed opportunities or misaligned financial decisions. And unfortunately, they often rely on a do-it-yourself approach to retirement planning, increasing the likelihood of costly mistakes.
How They Can Fix It
The good news? These gaps can easily be addressed with the right guidance and tools.
“Tools like retirement calculators that incorporate pension data, Social Security estimates, and personal savings can help provide a more accurate picture of future needs,” says Harris.
Try to seek out education as well. This can help you make sure you’re on track to meet your long-term financial goals.
“This can include participating in webinars, attending retirement planning seminars offered by their employer, or consulting with financial professionals who understand the intricacies of public pensions and government benefits,” says Harris.
By educating yourself, you can also better understand and leverage your options, including employer-sponsored plans, available at different stages of your career. Harris suggests that younger employees focus on earning enough to receive matching contributions, understand vesting timelines, and supplement retirement saving with accounts like Roth IRAs.
“Mid-career employees benefit from reviewing pension estimates, understanding buyback options, and reassessing life and disability coverage,” said Harris.” Those nearing retirement should concentrate on estimating healthcare costs, evaluating payout options, and making decisions on when to claim Social Security.”
You’ll also want to have a solid grasp of your current spending habits. This way you know how much to save to maintain a similar standard of living in retirement.
“This starts by estimating essential monthly expenses like housing, food, and healthcare,” Harris said. “Next, compare those needs against guaranteed income sources such as pensions and Social Security. The gap between the two helps define how much needs to be covered by savings or investments.”
Harris then suggests making a budget based on your expected retirement horizon, which could be anywhere from 10 to more than 30
Lastly, you may need to get personalized advice from a retirement professional who is familiar with public-sector benefits. This could be one recommended by your employer or one you find on your own.
“Employers play a vital role in retirement readiness and have a unique opportunity to provide meaningful support. This includes offering clear and accessible benefit statements, organizing regular retirement education sessions, and giving employees access to one-on-one financial counseling,” said Harris.
The Bottom Line
After years of serving their communities, public-sector workers deserve to look ahead to retirement with security and peace of mind. Helping them feel more prepared for retirement starts with addressing gaps in education and support. A combination of financial education, access to planning tools and resources, and an expert can go a long way toward helping workers retire with confidence.
