Retirement Income: The New Conversation
Our 11th Annual Retirement Survey
People consider retirement savings their most important financial obligation. While concerns about risks—like inflation, interest rates and market volatility—are at the forefront today, most 401(k) plan participants also consistently want help with the basics, from encourage me to save to help me invest the right way. At the same time, plan sponsors are concerned their participants aren’t saving enough.
Now, there’s another focus that’s equally critical for success: retirement income—how to turn savings into income replacement, protect it from market volatility and make it last as long as needed. Retirement plan features that provide income after the last paycheck are now conversation changers for plan participants, plan sponsors and retirement advisors alike.
Review Full Survey Findings
2024 Participant Survey
2024 Plan Sponsor Survey
The Retirement Landscape for Savers
Saving for retirement is a top priority, however other obligations are gaining ground. While most participants believe they could have saved more in their 20s, by the time they reach their 40s and 50s, they feel on track with how much they are saving. As in years past, most participants grade themselves as better than average or average in how they have saved.
74%
say retirement savings is a major financial obligation.
Rising Responsibilities
Housing, credit card balances and health care expenses.
6 in 10
are highly concerned about inflation and interest rates.
Debt Burdens
Paying off loans and debt are becoming a major stressor.
B to C
How most participants grade their savings efforts.
Plan Sponsors POV
Plan Sponsors are concerned that their plan participants aren’t saving enough and that their savings may not last as long as it needs to—even though the average contribution rate has either held steady or gone up over the past two years. They are also concerned about market volatility for those nearing retirement and cashing out and tax penalties for employees who leave.
New Want: Protect My Income
Converting retirement savings into reliable income is important to employees. And the idea of workplace plan features that allow them to receive income through retirement is appealing—especially if it’s protected. They do want their money to grow in retirement and need encouragement to set up a retirement income plan.
Plan Sponsor Views on Retirement Income
Nearly all plan sponsors agree it’s important to protect the value of employees’ entire workplace retirement savings so they can generate income later. They also want employees to have the opportunity to grow their income in retirement while also having 100% control and flexibility to make changes before and after they retire. How important are in-plan income features for participants? It may be another definition of retirement success.
A retirement plan without an income replacement plan is just a savings account.
Retirement Advisors: Change the Conversation
Our survey found some clear misunderstandings about retirement income from both participants and plan sponsors, especially regarding asset protection, in-plan features and guaranteed income. The solution? Retirement advisors can change the conversation. And that may start with asking the right questions.
Savings Plan or Income Replacement Plan?
One way is to think about retirement plans is in terms of income replacement. And to make sure plan sponsors are on the same page as participants. While our survey showed plan sponsors believe their employees want income replacement between 51% and 80%, we found participants were all over the board to maintain their current standard of living. This is just one of our tips. Contact us to learn more.
Methodology: The participant survey was conducted between June 11, 2024, and June 27, 2024. Survey included 1,505 full-time workers between the ages of 25 and 65 saving through their employer’s retirement plan. The data were weighted to reflect key demographics (gender, income, and education) among all American private sector participants between 25 and 65.
The sponsor survey was conducted between June 10, 2024, and June 26, 2024. Survey included 500 plan sponsor representatives holding a job title of Director or higher, and having considerable influence when it comes to making decisions about their company’s retirement plan (either 401(k), 403(b), or 457 plans). The data were weighted to reflect the makeup of the total defined contribution population by plan asset size.
Percentages in the tables and charts may not total 100 due to rounding and/or missing categories.
Greenwald Research of Washington, D.C., completed data collection and analysis.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.