BlackRock Survey: Overwhelming demand from workers, employers, and retirees for retirement income
June 03 2021 - 8:30AM
Business Wire
Plan sponsors concerned by the impact of COVID-19, though
many savers feel they are still on track for retirement
Confidence in retirement readiness differs along lines of age
group and gender
A large majority of workers saving for retirement through their
employers’ 401(k) plans want options that will help them generate
income in retirement, according to the fifth annual DC Pulse Survey
from BlackRock (NYSE: BLK).
According to the survey, 89% of defined contribution (DC) plan
participants are interested in owning a product designed to
generate retirement income, and almost 9 in 10 said having
guaranteed income in retirement would have a positive impact on
their financial well-being. Respondents who were already retired
also weighed in – 76% say having secure income in retirement makes
a bigger difference than they thought it would. And employers
agree, with 96% of plan sponsors indicating that they feel
responsible for helping participants generate and/or manage their
income in retirement.
While the SECURE Act of 2019 reduced barriers for plan sponsors
to offer in-plan income solutions, adoption has lagged – due, in
large part, to the necessary (though unforeseen) reprioritization
of HR and benefits departments in response to the pandemic.
Encouragingly, though, 82% of those who do not currently offer a
retirement income solution plan to add one in the next 12
months.
“Retirement income is a new frontier, and we’re encouraged that
front-footed plan sponsors are embracing retirement income
solutions - but the demand is much more urgent than the pace of
adoption,” said Anne Ackerley, Head of BlackRock’s Retirement
Group. “Workers saving for retirement today are concerned that they
are going to outlive their savings, or that they may not enjoy a
high quality of life in retirement. The time is now for companies
to provide their employees with solutions that can help bring peace
of mind.”
The Impact of the Pandemic
The survey results also demonstrate that COVID-19 had a negative
impact on retirement preparation for some – and for those plan
participants who were already behind in their savings, the pandemic
exacerbated their concerns. More than half (52%) of plan sponsors
who keep track of short-term 401(k) loan withdrawals said employees
used their 401(k) for emergency spending needs during 2020. Coupled
with other impacts of the pandemic, such as furloughs and
suspensions of company matches, 61% of plan sponsors said at least
half of their employees were negatively affected in terms of their
retirement readiness.
Encouragingly, 68% of DC plan participants still feel they are
currently on track with retirement savings in 2021, with only 10%
fearing they are not (21% are unsure where they stand). However,
47% of participants overall say that the pandemic has had some
negative effect on how on track they are with saving for
retirement.
“The effects of COVID-19 have been felt by American workers in
different ways. We know that many people who lost their jobs were
forced to withdraw from their long- term savings– but our data
shows that this was also the case for a number of people who were
fortunate enough to remain employed,” said Ackerley. “The good news
is that there are resources for employers that will help them with
a more holistic approach to financial planning and education for
employees, such as the Emergency Savings Initiative. Accumulation,
income, and short-term savings funds can be viewed as interlocking
pieces in an overall plan for retirement security.”
Divergence across demographics
The survey found that savers who are earlier in their careers
believe that they will not be able to enjoy the same quality of
retirement as previous generations. When it comes to financial
security in post-retirement, 76% of Millennials and 68% of Gen
X’ers agree that people in their generation won’t have the level of
retirement income that retirees used to have. The data also aligns
with Millennials’ strong interest in retirement income, with 94%
expressing interest in retirement income solutions.
Of all the groups surveyed, Gen X remains most uncertain about
their future retirement security: 25% of Gen X plan participants
are unsure if they are on track with their retirement savings, and
another 13% say they are not (more likely than any other age
group). Not saving enough, the cost of living, and other expenses
are the reasons cited for their concerns.
Across all age groups, the responses to the survey along gender
lines provided clear insights that women are more concerned and
feel less prepared than men for their financial futures. 59% of
women feel that they are on track with their retirement savings,
compared to 78% of men. 55% of men are worried about outliving
their retirement savings, compared to 64% of women.
“Our survey data reinforces what we have seen from previous
industry studies on the gender savings gap, so it’s not surprising
to see that women feel they are behind,” said Ackerley. “What’s
helpful about these data points is that we know where we need to
focus our efforts. We have an opportunity and a responsibility to
help through enhanced plan design tools such as auto-enrollment,
innovative solutions and leading educational resources to help
savers understand what’s needed to get back on track and stay
there.”
About BlackRock
BlackRock’s purpose is to help more and more people experience
financial well-being. As a fiduciary to investors and a leading
provider of financial technology, we help millions of people build
savings that serve them throughout their lives by making investing
easier and more affordable. For additional information on
BlackRock, please visit www.blackrock.com/corporate
About the DC Pulse Survey
The BlackRock DC Pulse Survey is a research study of 225 large
defined contribution plan sponsors in addition to over 1,000 plan
participants and 300 retired participants in the U.S. The survey is
executed by Escalent, Inc., an independent research company. All
respondents were interviewed using an online survey conducted in
March 2021. This is the fifth year that BlackRock has conducted the
DC Pulse Survey to provide insights into the minds of participants,
retirees and plan sponsors.
The plan sponsors who were interviewed had at least $300 million
in assets, with one-third of the respondents serving in benefits or
human resources roles, and the rest in finance, investment or
business management for their organizations. The plan participants
surveyed were employed full-time at the time of the survey and
participating in their employer’s 401(k) or 403(b) plan, with at
least $5,000 in assets in their current account. Retirees who
participated in the survey were retired at least 10 years and
previously enrolled in a 401(k) or 403(b) plan; some have stayed in
plan after retirement. Broken down by age group, the sample size
was 24% Millennial, 26% Gen X, 37% Boomer, and 13% Silent
Generation. All respondents were interviewed using an online
survey. For the sponsor sample, the survey’s margin of error is +/-
6.5 percentage points; for the participant sample, it is +/- 3.1
percentage points.
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version on businesswire.com: https://www.businesswire.com/news/home/20210603005135/en/
Media: Thomasin Bentley
Thomasin.bentley@BlackRock.com
Kristen Rivera Kristen.Rivera@BlackRock.com
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