Survey reveals pandemic's impact on retirement readiness, particularly on millennial and women workers
As the pandemic’s impact on finances and income remains fresh in people’s minds, employers will become increasingly instrumental in ensuring workers’ retirement readiness through group plans.
In its fifth annual DC pulse survey, BlackRock drew insights from an online poll of 225 large defined contribution plan sponsors in addition to over 1,000 plan participants and 300 retired participants in the U.S.
It found that 89% of defined contribution plan participants are interested in owning an investment product aimed at generating income for retirement, and almost the same number said having guaranteed income in retirement would positively impact their financial well-being. Among respondents who were already retired, three quarters (76%) said having a secure stream of retirement income makes a more substantial difference than they had expected.
Around two thirds of participants (68%) said they still feel as if they’re on pace with their retirement savings goals in 2021, and just one tenth (10%) said they fear they’ve been derailed. Still, nearly half of participants overall (47%) said the pandemic has had a negative impact on their progress in saving for retirement.
The perceived impact was larger among respondents who were earlier in their careers. A majority of millennials (76%) and Gen Xers (68%) agreed that compared to retirees that came before them, members of their generation won’t enjoy the same level of retirement income. In line with this, 94% of millennials expressed an interest in having retirement income solutions within their workplace savings plans.
The survey also revealed a financial gender divide that cut across all age groups. Just three fifths of women (59%) said that they feel on-track to reach their retirement savings goals, compared to four fifths (78%) of men. And while only 55% of men were concerned that they’d outlive their nest egg, 64% of women said the same.
Encouragingly, most employers appeared to recognize and accept their positions as stewards of employees’ financial futures. Ninety-six per cent of plan sponsors indicated that they feel responsible for helping participants generate and/or manage their income in retirement, and 82% of those sponsors who do not currently offer a retirement income solution intend to do so in the next 12 months.
“What’s helpful about these data points is that we know where we need to focus our efforts,” said Ackerley. “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.”