Plan Sponsors

Income for life: a key to retirement confidence


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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 prepare for retirement by giving them access to education and options aimed at helping them pursue their financial goals.

Recent findings underscore the importance of building that awareness. In TIAA’s 2016 Lifetime Income Survey, a majority of Americans (58%) said they feel confident about turning their retirement savings into income, and only 35% are concerned about running out of money in retirement (down from 44% in 2014)1.

Misplaced confidence

But fewer than half of Americans know how much they have in their retirement savings accounts. An even smaller number (35%) 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%) 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 services to help employees evaluate their current situations. It’s also important to engage your employees and suggest they:

  • Estimate retirement income needs. Few employees understand what portion of their pre-retirement income they will need when they are no longer working, with nearly two-thirds (63%) of people who are not yet retired (including students and the unemployed) underestimating or coming on the very low end of that target.2
  • Calculate expected retirement income. 53% of employees have not analyzed how to translate their savings into income.
  • Save for retirement. 41% of people not yet retired are saving 10% or less of their income—compared with expert recommendations of 10% to 15%.

TIAA’s survey found that retirement income analyses could help reduce retirement anxiety and boost confidence levels. Only 28% of Americans who have looked at how to translate their savings into retirement income are concerned about running out of money.

Seeking certainty

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% 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%) would prefer to get a monthly retirement income option from their employer rather than shopping for it on their own.

Have or have not?
Many employees aren't sure if their retirement plan offers an income option

The takeaway for employers: You may want to consider increasing education around retirement income—or consider adding a guaranteed income* option to plans that don’t already offer them.

Focusing on income

Your employees are counting on you to help them understand their retirement income options. That’s why it’s so important to focus your plan’s offerings, education and advice components. After all, meaningful retirement confidence results from knowing you can’t outlive your savings.