In conjunction with National Retirement Planning Week (April 8-12), Lincoln Financial Group launched a new, quarterly measurement of Americans’ retirement outlook. Called the Consumer Retirement Index, the initial launch found that only 25% of Americans are very confident about retirement.
Created in partnership with CivicScience, the index’s findings are based on respondents’ answers to three questions: being able to accumulate enough money to retire when they want, being able to convert savings into retirement income that will last throughout their lifetime, and having enough money to maintain their lifestyle in retirement.
In order to boost Americans’ retirement outlook, there are a number of practical things that retirement plan sponsors and advisers can do, Jamie Ohl, president of the retirement business at Lincoln, tells PLANSPONSOR.
Sponsors and advisers need to “make people aware of how critically important it is to save for retirement, and how much they need to save,” Ohl says. “Forty-three percent of people know they need to save 15% or more of their salary, and 60% know they need to save at least 10%. Being aware is the start.”
However, “The No. 1 issue [keeping people from saving for retirement] is competing priorities,” Ohl says. “If I think about individuals at every life stage, there is always something competing for retirement plan dollars, be it saving for a down payment on a home, saving for your children’s education or taking care of your parents. In order to save for retirement, people need to create a budget in order to find the money to save for retirement, so employees need budgeting tools. Only 45% of people have a budget.”
And the third thing that sponsors and advisers can do it to help people who are retiring convert their savings into income that can last their lifetime, Ohl says. It is a positive step that recordkeepers are including projected monthly income in retirement on participants’ statements and online, she says. The next step is to actually help people who are retiring create that lifetime income stream. Annuities can plan an important role in providing greater certainty about Americans’ income in retirement, Ohl says.
Sponsors and advisers also need to educate people about the importance of long-term care insurance, be it hybrid life insurance/long-term care products or riders than can be added to annuity and life insurance products, she says. To achieve all of the above, it is a wise move for participants to meet with a financial adviser, she says. They can help savers identify the benefits of the many solutions available in the marketplace to provide income and long-term care.
Ohl says she hopes the Consumer Retirement Index identifies areas where Americans need assistance, and that with the help of advisers and sponsors, the percentage of those who are very confident about retirement will grow over time.