The firm’s white paper titled “Searching for Certainty” details the findings of an online survey conducted with over 1,000 individuals with 401(k) plans nationwide. J.P. Morgan found 86% of respondents said they will need to know how much of their pre-retirement salary they can replace, yet almost one quarter (22%) aren’t even sure what they are on track to receive after they stop working. Overall, only 40% of respondents even feel comfortable that they will be able to reach their financial goals in retirement.
According to a press release, Americans are also dangerously underestimating how much money they will need in retirement. Among respondents who had a target retirement income replacement level in mind, nearly half (45%) thought they would need less than 75% of their pre-retirement salary level. However, J.P. Morgan said its research shows that a minimum guideline for successful retirement income is a replacement ratio of at least 70% or more.
Of the participants who said they would need 75%-100% of their pre-retirement salary after they stop working, less than a third even had enough savings to provide this income.
The survey found two-thirds of respondents admitted they don’t even know how much they should be saving for retirement. Nearly half are scared they will outlive their retirement savings.
The press release said most Americans have pushed aside retirement savings priorities, which rank a distant second to paying monthly bills, which accounts for 71% of respondents’ top priorities.
In addition, higher income employees are facing the most challenging shortfalls in closing the retirement income gap. While employers make available a non-qualified plan to complement retirement savings, according to J.P. Morgan’s research, 46% of non-qualified plan participants do not currently contribute to their primary defined contribution plan.The white paper is here.