A more mature workforce will present a challenge to employers and inevitably prompt them to be more proactive about helping their employees to be better prepared for retirement, SSgA contends.
“There has been a major shift in the past 10 to 15 years, and retirement plan participants are expecting to continue to earn in their retirement years,” says Fredrik Axsater, global head of defined contribution at SSgA. “The desire to continue working is not restricted by gender, age, savings, current income or education. This signals a big change in attitude toward retirement and is indicative of the survey results showing that 40% of participants anticipate working well past retirement age because they want to work, not because they have to work.” Overall, a full 50% expect to work past retirement age, the survey found.
The majority of participants (65%) expect to maintain their current lifestyle in retirement, and 64% of those between the ages of 50 and 75 wished they had started saving earlier, the survey also found. Among all participants, 80% would advise their younger selves to begin saving earlier.
Plan sponsors can be more hands-on about helping their workforce save adequately for retirement, Axsater says. “Conversations about lifestyle and influencing habits at an earlier point in an individual’s career can have a major impact on retirement preparedness.”
SSgA recommends that plan sponsors keep three points in mind
as they work to help their participants effectively prepare for retirement:
First, focus on younger participants, who have a long time horizon for setting aside money for retirement. Second, automatically enroll participants into a well-diversified portfolio and escalate their deferral rates. While sponsors may be hesitant to take charge for their employees, SSgA participant surveys have shown that participants actually appreciate their employer taking these steps for them. Third, offer a holistic financial wellness program to employees. This becomes increasingly important, SSgA says, since a survey in January found that 49% of participants were looking to move to more conservative investments, and only one third work with a financial adviser. The program should include targeted communications, SSgA says.
State Street Global Advisors (SSgA) collected data using a 10-minute online survey of 980 verified 401(k), 403(b), 457 and profit-sharing plan participants and retirees, ages 30 and older.
The survey can be downloaded here.