BlackRock Study: Confidence in Retirement Security Declines for First Time Since Pre-Pandemic
NEW YORK–(BUSINESS WIRE)–More Americans (37%) of all generations and demographics feel unprepared or unsure if they are on track for retirement compared to the previous three years, with more women than any other group (47%) reporting a lack of confidence, according to BlackRock’s Seventh Annual Retirement Survey, BlackRock’s reading on retirement. For the first time in several years, the data shows a notable drop in confidence among savers who participate in a workplace pension plan, down from record highs (68%) in 2021. Among savers who don’t didn’t have access to a workplace pension, only 51% think they are on track for retirement.
Inflation is a key factor in lowering confidence, and almost all (87%) of workplace savers say they are concerned about the impact of inflation on their retirement. These savers also report decreased spending on large items (54%) and consumables (42%). Most of all respondents (64%) are also worried about the lifespan of their nest egg – an even higher data point among Black/African American (75%), Asian/Pacific Islander (71 %) and Hispanic/Latino. (67%). Similarly, a majority of plan sponsors (69%) expressed concern that inflation would deplete their members’ retirement savings, and nearly all employers and savers (90%) are interested in investment options. which would provide them with a guaranteed income in retirement.
Savings rates among workplace plan participants was a positive finding of the research. Across the generations of Americans currently in the workforce, the youngest in modern history, the youngest savers in the workplace (Gen Z) demonstrate the greatest discipline in retirement savings . The study found that this group saves an average of 14% of each paycheck, compared to 12% for other generations (Millennials, Gen X and Boomers). However, a third of Gen Z respondents think they can comfortably retire on less than $250,000, compared to half of baby boomers who said they would need $1-3 million to retire. retire. By contrast, 17% of savers without access to a corporate plan contribute nothing at all to retirement, compared to only 1% of corporate savers with access to plans.
Anne Ackerley, Head of Retirement at BlackRock, said: “As we face new market headwinds that could impact the retirement security of millions of Americans, this is a critical time for our industry to ensure that people plan for their retirement with confidence and clarity. While it’s encouraging to see double-digit savings rates in every generation, we have work to do to help more Americans retire with dignity and on their own terms — especially those who don’t. have no access to employer savings plans, as well as women and people of color.
- Confidence in retirement varies from generation to generation, with a high percentage of Millennials (19%) and Gen Xers (22%) saying they are not on track for retirement compared to baby boomers (12%). Plan sponsors are also concerned about retirement readiness and report that on average, only 58% of their employees are on track for retirement, down from 63% in 2021. Gen Z, which was included in survey for the first time this year, reported the highest level of confidence (69%) in their retirement prospects.
- Interest in retirement income is higher than ever, with 87% of workplace savers willing to invest a portion of their retirement savings in return for guaranteed regular income payments (up from 71% last year). Similarly, 74% of employers said retirement income has become more important to their employees, and 90% agreed that plan members would benefit from a target date fund (TDF) that generates guaranteed retirement income. .
- Savers without access to a workplace pension are most at risk of being unprepared for retirement, with 46% saying they hold at least some of their savings in cash only, missing out on opportunities to build wealth. This group also reported low familiarity with common retirement vehicles such as TDFs (41%), but when given a description of these vehicles, 66% reported high interest, highlighting a key opportunity for the investment education.
- Women and different communities have different levels of confidence in retirement. Only 53% of women said they felt on track with their retirement savings, compared to 63% of all workplace savers and 73% of men. Among the various groups, sentiment varies, with 65% of Black/African Americans, 57% of Hispanics/Latinos and 51% of Asians/Pacific Islanders saying they are on track for retirement.
- Young workers are saving more, but need guidance to set goals. Gen Z workplace savers are heeding decades-long pressure from the retirement industry to save more – however, a third of these respondents believed that savings of less than $250,000 would be enough to take a comfortable retirement, signaling that this group may need more education on retirement decumulation planning. Gen Z showed the most familiarity with retirement strategies such as TDFs. Similarly, 51% of Millennials say they have invested in TDFs, and among this group, 38% have no intention of changing their allocation – a higher percentage than any other generation.
About Reading BlackRock on Retirement
The BlackRock Read on Retirement, formerly known as the BlackRock DC Pulse Survey, provides insights from a research study of over 300 major defined contribution plan sponsors, 1,300 mid-life retirement plan savers work, 1,300 independent savers and 300 retired workplace savers in the United States. The survey is conducted by Escalent, an independent research company. All respondents were interviewed using an online survey conducted from March 25 to April 30, 2022.
About Black Rock
BlackRock’s goal is to help more and more people experience financial wellness. As an investor trustee and a leading fintech provider, we help millions of people build savings that will last them a lifetime by making investing easier and more affordable. For more information about BlackRock, please visit www.blackrock.com/corporate | Twitter: @Black rock | LinkedIn: www.linkedin.com/company/blackrock