You want your employees to feel confident about their retirement outlook—but you also want them to base that confidence on careful planning. As a plan sponsor, you can help your employees determine how prepared they really are for retirement by giving them access to education, advice and options aimed at helping achieve retirement income for life.
Recent findings underscore the need for building that awareness. In TIAA’s 2016 Lifetime Income Survey , a majority of Americans (58 percent) said they feel confident about turning their retirement savings into income, and only 35 percent are concerned about running out of money in retirement (down from 44 percent in 2014).
But fewer than half of Americans know how much they have in their retirement savings accounts. An even smaller number (35 percent) know how much retirement income they’ll get each month.
More worrisome: 17% of Americans who work aren’t saving for retirement at all. And fewer than half of the non-savers (47 percent) are concerned about running out of money in retirement. These findings show how much help employees need understanding their retirement readiness—or lack thereof.
How employers can help
To clear up such misconceptions, consider working with your plan provider to make sure you’re offering planning tools, including retirement income calculators, and advice services to help employees evaluate their current situations. It’s also important to engage your employees, encouraging them to:
TIAA’s survey found that retirement income analyses could help reduce retirement anxiety and boost confidence levels. Only 28 percent of Americans who have looked at how to translate their savings into retirement income are concerned about running out of money.
Another key insight: Half of Americans with an employer-sponsored retirement plan think its primary goal is to provide guaranteed money every month to cover living expenses in retirement. And 24 percent believe their plan’s goal is to ensure that their savings will be safe, regardless of market conditions.
Yet many employees are not certain that their retirement plan offers an investment product that can provide guaranteed monthly payments. But many people (62 percent) would prefer to get a monthly retirement income option from their employer rather than shopping for it on their own.
The takeaway for employers: You may need to ramp up education around retirement income—or consider adding a guaranteed income* option to plans that don’t already offer them.
Focus on income
Your employees are counting on you to help them get ready for retirement. That’s why it’s so important to focus your plan’s offerings, education and advice components on lifetime income. After all, meaningful retirement confidence results from knowing you can’t outlive your savings.
1The 2016 TIAA Lifetime Income Survey was conducted by KRC Research by phone among a national random sample of 1,000 adults, age 18 years and older, from June 7-16, 2016, using a combination of landline and cell phone interviews. The margin of error for the entire sample is plus or minus 3.1 percentage points. Margin of error may vary depending on subgroup analysis.
2They estimate they will need less than 75% of their current income (compared to expert recommendations of 70%-100%).
*Guarantees are subject to the claims paying ability of the issuing company.
TIAA-CREF Individual & Institutional Services, LLC, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products.
© 2016 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017