Americans workers know what they are looking for in retirement. The problem is, they don’t know how they will pay for it.
“Time and again, Americans overwhelmingly say they want a comfortable retirement, and shifts in the past few years about how we work and think about work has not changed that,” said Sri Reddy, senior vice president, retirement and income solutions, for Principal.
“But our research shows there is a lot of work to be done to help people feel more secure and confident in their planning.”
Seven in 10 respondents in a recent Principal survey listed “living comfortably in retirement” as a top life goal, along with good health and financial wellness.
However, fewer than half are confident that their savings will be enough, and another 55 percent don’t feel secure in their retirement planning. Among the other findings:
Knowledge and retirement plan capabilities are keys to boosting confidence. Fifty percent of workers either are unsure how much they should be saving for retirement or know they are saving less than they should to reach their goals. Workers see the top criteria for reaching retirement goals as employer-match contributions (62 percent), a balanced investment portfolio (52 percent) and financial advice and guidance (51 percent).
Lack of confidence may be due to the changing nature of retirement. Historically, retirement timing in America primarily was driven by the age at which a person could collect Social Security, pension or defined benefit plan payments. Today, workers cite “when I’ve saved enough” or “when I cannot do the work any longer” as determining factors.
Having a steady paycheck in retirement beyond Social Security is an elusive goal. The majority of workers lack confidence that Social Security will be available to them, with 64 percent citing its viability for them as a concern, including 73 percent of Gen Z workers. That said, only 30 percent created their retirement savings goal based on an estimated “income floor” in retirement, and 73 percent admit they lack knowledge of how to create income from savings.
However, employers, many in search of talent, are poised to bolster retirement planning and benefits and know there is an opportunity to do more.
“In a world where fewer Americans have pensions, securing a source of steady income beyond Social Security is not only smart but can provide confidence for people to spend the money they’ve worked so hard to save without fear of running out,” Reddy said. “Identifying an ‘income floor’ in retirement is a great way for people to kickstart this process.”