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2/18/2014 0 Comments

Plan Activity Relatively Calm

According to the Investment Company Institute (ICI), defined contribution (DC) plan activity remained stable for the most part through the first three quarters of 2013. Highlights include:

Withdrawals were at 3%, similar to the first three quarters of 2012.
Hardship withdrawals were at 1.4%, the same as a year earlier.
9.2% changed asset allocations for their account balances, while 6.8% did the same for contributions.
Loan activity is still high, at 18.3% of participants.
401(k) and other DC assets comprise about 25% of the nearly $22 trillion in total retirement assets.

The ICI survey represents about 24 million accounts serviced by DC recordkeeping firms.

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2/3/2014 0 Comments

I live about half an hour from MetLife Stadium, where the Super Bowl was played in relatively balmy weather for early February. The worries about snow didn't materialize for the game. For those traveling today, it's quite a different story. Many schools in northern New Jersey are closed today due to another snowstorm. The game and the surrounding hype are a nice distraction from people's worries. Like the errant snap to start the game yesterday, many people are finding the concept of security in retirement elusive at best.

TIAA-CREF just released a study that shows retirement security is top of mind for nearly three-quarters of respondents. Forty percent (40%) name as their top retirement goal ensuring that their retirement savings are safe regardless of what happens in the stock market. Just over one-third (34%) name having sufficient guaranteed monthly income to cover living costs in retirement as the top priority.

TIAA-CREF's survey highlights some key disconnects among participants:

72% of participants either do not have a retirement income option in their plan or are unclear as to whether the plan has it or not
Experts often suggest that retirees need between 70% and 90% of preretirement income to retire comfortably, but only 21% of survey respondents said they need more than 75%
A significant 44% of respondents are very or somewhat concerned about running out of savings in retirement
Retirement plans that focus on accumulation rather than income are unlikely to meet participant goals

An article in the New York Times today noted that many restaurants and retailers that focus on the middle market are struggling. The higher-end stores and value-centered stores are doing better. The findings from the TIAA-CREF survey are an indirect but logical extension of the challenges many middle-income families are trying to address, and something policy makers and legislators should consider.

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Plan Activity Relatively Calm

Elusive Retirement Security

Blog Author - Ken Felsher

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