Following your Path

Simple steps to improve your retirement readiness

PERHAPS, like many nurses, you’ve become quite business savvy over the past few years. Increasing numbers of nurses are responsible for creating unit budgets, forecasting expenses, and calculating cost effectiveness. Yet when asked about their personal finances and retirement planning, few nurses express confidence in their financial abilities.

A recent national survey of registered nurses (RNs) found that nearly 45% were age 50 or older. In Florida, Texas, and
many other states, nearly half the RN workforce is expected to retire over the next 15 years. But are they ready to retire?

Have they planned for it adequately? Retirement planning means ensuring you have an adequate income after you retire, as well as crafting a plan to stay active, relevant, and connected. This article highlights strategies you can easily incorporate into your life to ensure a strong financial future.

Are you financially ready to retire?

Many nurses put off saving money. Susan Flores, BSN, RN, Nurse Recruitment and Retention Manager at Northeast Baptist Hospital in Texas, believes nurses are less financially savvy than they should be. “We provide information about our 401(k) plan during orientation,” she says, “but they are so overwhelmed with information, they overlook it.”

Little effort has been made to assess nurses’ retirement readiness. Blakeley and Ribeiro studied the retirement readiness of 200 nurses ages 45 and older in Canada. They found 37% had done little or no retirement planning, 39% had done some planning, and 24% had done a great deal. When asked to rank the importance of retirement readiness strategies, respondents’ top priorities were health and wellbeing rather than finances.

The key to developing a secure financial future is having enough income to cover expenses. In a 2008 survey of RNs’ retirement perceptions conducted by the Center for American Nurses and WISER, the Women’s Institute for a Secure Retirement, nurses reported they were saving for retirement, but only a few believed they’d saved enough to last through their “golden years.” One third had saved less than $50,000; 25% had saved more than $250,000. These findings reinforce the view that most nurses aren’t financially prepared for retirement.


The demands of balancing work and life can feel overwhelming. Many nurses are putting their children through college, supporting aging parents, or struggling with creditcard debt. Given these stressors and the need to focus on immediate budget issues, it’s easy to overlook the importance of longterm financial planning. In fact, 61% of nurses responding to the survey described above reported they lacked time to focus on their financial future because of competing priorities.

But the earlier you start saving, the better. “Saving $1,000 to $2,000 per year can add up to millions by the time you’re ready to retire,” Flores points out. Of course, you need to start saving early to accumulate that much. She recommends that even the busiest
nurses take a few moments to examine their personal finances and make a few critical decisions toward a strong future.

Examine your future income sources

The first step in building a retirement plan is to examine
your future income sources. Three general
sources exist: Social Security benefits; employer-based
retirement plans, such as 401(k) or 403(b) plans; and
individual retirement accounts (IRA).

Social Security benefits are the foundation for most
retirement plans. You can estimate your future benefits
by using the Social Security Administration website
(www.ssa.gov/onlineservices/). For instance, you can
determine your monthly benefit if you retire at age 62,
and compare this with the higher benefit you’d get by
waiting until the full retirement age. Be aware, though,
that Social Security benefits are only about 40% of your
final year’s earned income, so they shouldn’t be your
only source of retirement income.

Over the past decade, responsibility for building a
retirement income stream has been shifting from employers
to individuals. Employer-funded pensions are
no longer a staple of retirement income. Today, most
of us must rely on plans that require more personal
participation. Statistics show that only half the workforce
has employer-sponsored retirement savings
plans, such as 401(k), 403(b), or 457 plans. Generally,
workers decide how much to contribute to the
plan and employers add an additional or matching
contribution. As a general rule, financial planners recommend
an annual contribution of 10% to 15% of
your income.

Participating in an employer-sponsored plan
doesn’t eliminate the need for individual retirement
savings. Traditional and Roth IRAs are available
through a host of financial institutions to help you
save for the future. (See Financial to-do’s by decade by clicking the PDf icon above.)

Determine how long your income must last

In the second step of retirement planning, determine
how long your retirement income will have to last by
estimating your longevity. In general, retirees might
live 20 to 40 years after they retire. In the Center’s
survey, 44% of RNs indicated they would likely live
more than 20 years in retirement. You must ensure
you have income throughout this period.

Finally, estimate your income needs during retirement.
Consider these questions: What do you anticipate
you’ll pay for housing? What do you expect to
pay for health care? What taxes will you have to pay?
Do you expect to have car payments? How much do
you think you’ll spend on future hobbies, travel, entertainment,
and other leisure activities?

Retirement planning calculators are great tools for
exploring various retirement scenarios and determining
the income you’ll need to support your goals.
Many calculators are available online and through financial
institutions.

Get financially literate

A higher level of financial literacy is associated with a
higher incidence of retirement planning. Resources are
available to help nurses understand common financial
practices, such as saving, borrowing, and investing.
Financial educational sessions are offered at nursing
conferences and career events. WISER and the Center
have created easily accessible podcasts, newsletters,
and a toolkit to help nurses gain financial savvy.

Also, more employers are hosting financial planning or retirement planning programs for employees. Wake-Med Health & Hospitals in Raleigh, North Carolina, offers
workshops for employees and one-on-one financial
and benefits counseling. If your employer doesn’t hold
workshops, suggest they consider doing so. Such programs
not only help employees understand the value of
their benefits; they ease worry and increase productivity.

A little planning goes a long way. People who participate
in financial planning can nearly double their
net worth. So spend a few moments today planning
your retirement. A sense of economic well-being later
in life is priceless.

Selected references

Blakeley J, Ribeiro V. Are nurses prepared for retirement? Nurs
Manag
. 2008;16:744-752.

Center for American Nurses. http://nursingworld.org.
Accessed May 7, 2011.

Center for American Nurses and WISER, the Women’s Institute for a
Secure Retirement. The Busy Nurse’s Guide to Financial Planning.
May 2010.

Clark R, Morrill M. Improving Worker’s Financial Literacy: A Symposium
Summary
. Pension Research Council Working Paper. 2009;1-25.

FINRA Investor Education Foundation. Financial Capability in the
United States. National Survey—Executive Summary. www.finra
foundation.org/web/groups/foundation/@foundation/documents/
foundation/p120535.pdf
. Accessed May 7, 2011.

Florida Center for Nursing. Florida’s RN and ARNP Supply: Growth,
Demographics, and Employment Characteristics
. www.flcenterfornursing.
org/files/RN_Supply_2010.pdf
. Accessed May 7, 2011.

Health Resources and Services Administration. The Registered Nurse
Population. Findings from the 2008 National Sample Survey of Registered
Nurses
. www.thefutureofnursing.org/sites/default/files/
RN%20Nurse%20Population.pdf
. Accessed May 12, 2011.

Osborne J. Final report on the nurse investor education survey. Osborne
Consulting
, 2008;1-7.

Pension Research Council. Financial Literacy: Implications For Retirement
Security And The Financial Marketplace
. Pension Research Council Working Paper. 2010:9.

Retirement planner. Social Security Online. www.ssa.gov/retire2/
near.htm
. Accessed May 7, 2011.

WISER, the Women’s Institute for a Secure Retirement. http://wiserwomen.org/. Accessed May 7, 2011.

When this article was written, Terri Gaffney was Vice President of Nursing
Communications & Initiatives at Gannett Healthcare Group in Falls Church,
Virginia.WyleciaWiggs Harris is Chief of Staff at the American Nurses Association.

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