Confidence in retirement security drops dramatically across all demographic groups

More than a third of Americans – 37% – feel unprepared or unsure if they are on track for retirement. This is the first time in several years that data from the BlackRock Read on Retirement 2022 survey has indicated a notable drop in confidence among savers participating in a workplace retirement plan, from a high of 68% in 2021. Among savers who did not have access to a workplace pension plan, only 51% believe they are on track for 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. .

Inflation is a key driver of declining confidence, BlackRock officials say, and nearly 90% 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%). A majority of survey respondents, around 64%, also worry about how long their nest egg will last over their lifetime – an even higher data point among Black/African Americans (75%), Asian/Pacific Islander (71%) and Hispanic/Latino (67%) respondents. In addition, 90% of all employers and savers are interested in investment options that would provide them with guaranteed retirement income.

The good news is that, of all Americans currently in the workforce – the most in modern history, by the way – the youngest savers in the workplace (Gen Z) are showing the greatest discipline in retirement savings. BlackRock researchers found that this group sets aside an average of 14% of each paycheck, compared to 12% for other generations (Millennials, Gen X and Baby 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.

Related: Are Pre-Retirees Spending Too Much in Retirement?

“As we experience new market headwinds that could impact the retirement security of millions of Americans, this is a critical time for our industry to ensure people plan for retirement with confidence. and clarity,” Anne Ackerley, retirement manager at BlackRock, said in a statement. “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 do not have access to employer savings plans, as well as women and people of color. ”

Other key findings:

  • 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%).
  • 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 say retirement income has become more important to their employees, and 90% agree that plan members would benefit from a target date fund (TDF) that generates guaranteed retirement income.
  • Investors who do not have access to a workplace pension plan 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 wealth-generating opportunities. This group also reported low awareness of common retirement instruments such as target date funds or TDFs (41%).
  • 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 various groups, 65% of Blacks, 57% of Hispanic/Latino respondents and 51% of Asian/Pacific Islander respondents say they are on track for retirement.

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