KnowHow Archive

Plan Sponsor Guide Participant Guide

Unrealistic Expectations

If it's too good to be true...

Participants frequently seem to exist in what can most kindly be termed a state of eternal optimism about where their retirement income will come from. Indeed, nearly half (47%) of workers who have not even begun saving for retirement are still somewhat confident about having enough money in retirement, according to the 2004 Retirement Confidence Study (RCS) from the Employee Benefits Research Institute (EBRI) and Mathew Greenwald & Associates.
Casting about for a basis for that optimism, the RCS authors suggest it arises from a number of questionable assumptions by workers: that they will work past age 65, that their post-retirement expenses will be less than during their working career, and an unreal expectation of what employers will provide.
This month's Know How highlights three key assumptions—orperhaps more accurately, misassumptions—with an eye toward encouraging participants to rethink what they may well have been taking for granted.
You can let the participants "grade" their own papers—and, with any luck at all, they will see the flaws in their own presumptions about retirement savings. Then, you can help them fill in the gaps. As always, we look forward to your thoughts and comments. 
Note: The RCS is conducted annually by the Employee Benefit Research Institute (EBRI), the American Savings Education Council (ASEC), and Mathew Greenwald & Associates. A copy of the full 2004 report, as published in the April 2004 EBRI Issue Brief, can be downloaded at