July 18, 2012 (PLANSPONSOR.com) - Employees across the United States are willing to save more for retirement and report that there is room in their budgets to do so.
However, many defined contribution (DC) investors are hampered by an “action gap” caused by the disconnect between understanding what is important and knowing how to take action, according to a survey of plan participants released by State Street Global Advisors (SSgA).
Seventy-eight percent of survey respondents reported they know it is important to determine how much to save for a secure retirement but only 33% claim to have the knowledge to determine that amount. The majority, 83%, of respondents said they could cut their household budget by at least 5% to save more--including 64% that said they could reduce their budget by 10% or more.
In addition, 52% of respondents would be willing to increase their savings rate to as high as 10% if their employer automatically increased their savings rate by 1% each year.
The bi-annual SSgA Defined Contribution Investor Survey, conducted jointly with the Boston Research Group uncovered three findings that are especially important for helping employers and employees improve retirement outcomes for DC investors:
- Savings willingness and elasticity, or flexibility in budgets to save more, are significant;
- Participants display a significant “Action Gap” between understanding the need to take action and possessing the knowledge to do so; and
- Simplicity and repetition are key to engaging employees to help close the “Action Gap.”