Back in the 1990's, interactive voice response (IVR) was a major tool for providing retirement plan information. Using the internet was, at best, an afterthought. Palm Pilots were around, then the Blackberry became a popular business tool. The iPod was still a few years away. Mark Zuckerberg was a teenager. As we moved into the 21st century, the iPod led an incredibly successful string of product introductions for Apple - first the iPhone and then the iPad. At one time, AOL and MySpace were household brands. In 2004, a new company, Facebook, was launched, dramatically changing the way people interact. LinkedIn was launched a year earlier, in 2003. While not rising to the audience numbers of Facebook, LinkedIn has proved to be an extremely important tool for people in the business world to communicate.
This brings us to a survey released by MassMutual, fielded by Brightwork Partners. Nearly 2,100 defined contribution plan participants were surveyed. Highlights include:
While the social media numbers may seem modest, it's good to remember that not too long ago, even the internet was an afterthought as far as communicating with participants was concerned.
Once upon a time, many workers dreamed of an early retirement, perhaps between ages 55 and 65, living financially secure. Economic uncertainty has turned this vision upside down. The 2008-2009 downturn, in particular, made many people realize that they might need to work longer than expected, not shorter.
Several recent reports bear out that retirement savings is problematic for many individuals. The Employee Benefit Research Institute (EBRI) notes that in 1998, some 24% planned to retire before age 60 and another 25% between 60 and 64, versus 9% before 60 and 14% between 60 and 64 here in 2013. Similarly, only 7% in 1998 said they would retire age 70 or later, versus 26% in 2013.
PNC released a report whose findings echo the EBRI data. PNC found that 49% of those who have not yet retired will have to delay retirement to later than what they had planned, primarily to be able to increase savings. For those who already retired, almost six in ten (58%) retired earlier than planned, primarily due to health issues (40%) and employer actions (28%) such as layoffs or forced retirement.
A Prudential report finds that women are particularly concerned about retirement savings shortfalls. While retaining a sense of optimism, more than one-third of women are either struggling to make ends meet or are falling behind. Women are not particularly confident about saving for retirement and worry about outliving their savings.
While there may be signs of economic improvement, it is clear that many individuals are concerned about their financial well=being in retirement. Account balances may have rebounded the last couple of years, but plan participants have their work cut out for them.
A recent report from J.P. Morgan Asset Management stresses the important role that automated plan features often play in helping participants achieve a secure retirement. Some plan sponsors are reluctant to modify their DC plans out of concern that their participants will become upset, as well as due to perceived fiduciary obstacles. What is particularly noteworthy is that the report takes it a step further and addresses this concern, finding that most participants are either neutral or would welcome help in achieving a secure retirement, with a rather small group still wishing to handle their finances themselves. The report notes that participants can always opt out of automated plan features. Larger plans appear to be leading the way in addressing the concerns, with greater levels of implementation of automated features. The report takes note of the many financial challenges that participants face and suggests that taking a holistic approach to the financial security of employees is a laudable goal for plan sponsors. Since its inception, this blog has taken the position that retirement savings does not take place in a vacuum, but rather in the midst of other financial challenges. The J.P.Morgan report appears to agree with this sentiment.
Blog Author - Ken Felsher
With over 25 years of writing, editing, and research experience. I enjoy sharing with my readers my love of working with content on a variety of subjects.
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