Knowledge Gap on Income Needs Denotes Deeper Problems

Across generations, U.S. workers still struggle to set and follow retirement income plans, a LIMRA Secure Retirement Institute study shows.

Despite unprecedented access to online financial planning tools, a majority of workers in the U.S. still don’t know how much they should be saving for retirement.

No matter the generation, less than half of Americans responding to a recent LIMRA Secure Retirement Institute survey said they understood how much they should be saving for retirement. Only four in 10 Boomers and Generation X workers reported knowing how much they should be saving to avoid running out of money in retirement, and the figure is even worse among Millennials, at about three out of 10.

Cecilia Shiner, associate research director at the LIMRA Secure Retirement Institute, adds that if consumers aren’t confident they are doing the basics correctly, it is unlikely that they will be confident in their overall retirement prospects. At the same time, general confidence about one’s retirement prospects—without a formal income target and savings plan—would likely be unwarranted, the research warns, because many investors significantly underestimate the amount of wealth it takes to fund a retirement of even 10 years, let alone 15 or 30 years.

One factor underlying the knowledge gap is a lack of enthusiasm around forecasting tools and online education, LIMRA Secure Retirement Institute says. Other factors include misperceptions about minimum balance requirements and the cost of hiring a professional financial adviser, either inside or outside of the defined contribution (DC) plan context, along with more mundane challenges, such as simply not having enough time between work and family demands to build a formal plan.

The research finds nearly half of Baby Boomers and four in 10 Gen Xers and Millennials who have access to a DC retirement plan are saving at least 10% of their income in their current DC plan—a success threshold commonly cited in the advisory industry. Across all generations, about four in 10 select their DC plan investments on their own. 

“Millennials and Gen X workers are more likely to be auto-enrolled, so their investments are often automatically selected for them, while Boomers were slightly more likely to engage a financial professional to help them select their investments,” the research explains.

Perhaps the toughest finding from the LIMRA Secure Retirement Institute research: Only one in 10 American workers reports being very knowledgeable about investments or financial products. Boomers and Gen X consumers were more likely to feel “somewhat knowledgeable,” at 51% and 46%, respectively, while more Millennials describe themselves as not very or not at all knowledgeable (49%). 

“Across all generations, only about one quarter of workers are using a paid financial professional,” Shiner concludes. “Prior research has found that consumers who use a financial professional to plan for retirement are more likely to feel confident in their retirement security. Even among Boomers, our research shows only 30% have a retirement plan—and only a third of them say it is a formal plan.” 

The findings are based on a survey of more than 2,000 working Americans who are household financial decisionmakers and aged 20 to 75. More information and other LIMRA Secure Retirement Institute research is at