Participants Deferring Less Than 10% at Risk in Retirement

Retirement planning often focuses on asset allocation, but Murphy said the savings rate is crucial. Automatic enrollment with an opt-out option, as well as higher initial deferral rates, can help close the savings gap. “I think there’s still an awareness challenge … in terms of helping people understand the serious aspect of this,” he said.

“I think [retirement preparedness] all starts with this issue around the inadequate savings rates, the inadequate balances,” he added.

Plan sponsors should enlist the help of providers and advisers who view retirement income replacement as a key metric to participant success, according to Murphy. “We believe unequivocally that workplace savings is the way to get at this issue around retirement preparedness,” he said.   

Putnam’s research indicated that 71% of DC-eligible households view retirement as a major savings objective. Sponsors should seek providers and advisers who offer an array of tools and resources to help participants meet this objective. According to Putnam’s research, 29% of DC-eligible households have an adviser. 

Corie Russell
editors@plansponsor.com