Plan participants’ shortfalls and worries about retirement preparedness can provide an opportunity for plan sponsors to fill the void with participant education, tools and financial advisory services.
Less than half of Americans are taking basic steps to prepare for retirement, and their confidence about how much they need to put away to be financially comfortable after they finish working dipped to a record low this year, according to the 23rd Retirement Confidence Survey, released by the Employee Benefit Research Institute on March 19.
The study also found a continuing decline since 2010 in the number of people who say they are saving for retirement at all; the 2013 report says 57 percent are putting away funds for this purpose. (This figure hit a two-decade peak in 2009 of 65 percent.) Weaker confidence in financial security during retirement was tied to several economic factors but paramount is the realization of just how much workers may need to save, according to the EBRI’s analysis of the latest results.
For example, the survey found that only 46 percent of employees said they had tried to calculate how much they will need to have saved by the time they retire to live comfortably. Nevin Adams, director, Education and External Relations and co-director of EBRI’s Center for Research on Retirement Income, said that fact should encourage plan sponsors to provide and promote retirement savings calculators for their plan participants. “Once people do that calculation, they’ve been seen to set higher (savings) goals and be more confident about their retirement,” he said. (See ¶413 in The 401(k) Handbook for a description of interactive investment materials such as savings calculators and U.S. Department of Labor guidance on providing these.)
Although more than half of respondents registered some confidence in their retirement finances, 28 percent are “not at all confident,” up from 23 percent in 2012, and 21 percent said they are “not too confident.” The EBRI director said the dip recorded this year may in fact be an encouraging sign for plan sponsors and participants because it likely shows heightened awareness of the challenges ahead.
Finding out More
To read the complete story on Thompson’s HR Compliance Expert, click here.
For more information about increasing employees’ awareness and appreciation of your retirement plan, go to ¶252 in the Pension Plan Fix-It Handbook.