This year’s People & Money report compares the responses of Americans participating in a DC plan versus those who do not.
What did we find? The survey suggests that Defined Contribution (DC) plan sponsors have done more than just help participants build retirement savings. They’re also developing a culture where participants feel confident about investing, take advantage of financial tools and education, and are willing and able to seek advice. Here are four key insights that illustrate why retirement plan participants are better positioned for success.
1. DC participants believe “Investing is for people like me”
One of the key questions in the survey asks whether respondents agree with the statement “Investing is for people like me.” DC participants agree in a significantly higher proportion:
It may be that plan sponsor efforts to enroll participants have helped reduce perceived barriers and the old notion that investing is an elite activity. Does the confidence of DC participants who identify as investors also mean they show greater comfort with key investment concepts? The People & Money survey suggests they do.
2. They’re more open to tools & advice
Why are DC participants more comfortable with fintech & advice than their non-DC peers? Part of the answer may be that many participants have these tools and resources made readily available to them.
The participant population’s disposition to seek advice–and the high proportion who identify their plan as a source of financial knowledge–is further evidence of how plan sponsors have helped build an investing culture. Increased participant desire for advice extends beyond their plan too, as the table below suggests.
DC participants are also more willing to embrace financial technology for decision-making support and money management. Another encouraging finding? They are more willing to use financial decision-making tools to explore investment scenarios and calculate risk.
3. They have greater optimism
In a separate BlackRock survey,1 92% of DC participants agree that they are happier and more confident because they are saving for retirement. The People & Money survey also supports this finding.
When asked about their current financial well-being, DC participants are nearly twice as optimistic when we compare those most positive.
4. They are more likely to have retirement goals
Unsurprisingly, the DC participants are more focused on retirement, with 61% of the DC subset listing retirement as a goal, compared to 30% of the overall population. Dagmar Nikles, head of Plan Design Strategy for the BlackRock Retirement Group, believes that the greater focus on retirement may be a foundation for their optimism. “We find that merely being cognizant of retirement challenges is an important first step in taking action – and that taking action builds confidence.”
The bottom line: a solid foundation
Comparing DC plan participants to the general investor population in the People & Money survey suggests that DC plans have not only provided a foundation to save for retirement, but have also helped build a culture where participants think of themselves as investors and are willing to seek out the advice and plan better for retirement.
Expanding the reach of the DC system is a priority–as is evolving it with new solutions to meet the growing retirement challenge. BlackRock strives to provide solutions to support more workers retire with dignity.
*This survey was fielded between November 2019 and January 2020, with 4,004 respondents from the US.
© 2020 BlackRock, Inc. All rights reserved.
1The BlackRock DC Pulse Survey is a research study of over 200 large defined contribution plan sponsors, 1,000 plan participants and 300 retired participants in the U.S., and is executed by Escalent, an independent research company. All respondents were interviewed using an online survey. The survey was conducted in January and February 2020, with a follow up survey conducted in April 2020 of 300 participants and 100 retirees.
About the BlackRock People & Money Survey: One of the largest global surveys ever conducted on the topic of financial well-being, the survey interviewed 26,814 respondents, in 18 nations. In North America: the US and Canada; in Europe: Germany, Italy, Switzerland, France, Belgium, Netherlands, Denmark, Spain, Sweden and the UK; In Latin America: Brazil and Mexico; in Asia: China, Hong Kong, Japan, Singapore and Taiwan. Respondents were ages 25-74 and were either the primary or shared decision maker for savings and investments in the household. No income or asset qualifications were used in selecting the survey’s participants. Executed with the support of Kelton Global, an independent research consultancy, the survey took place online from November 2019 to January 2020. The margin of error on this global sample is +/-.598 percent.
This material is provided for educational purposes only and should not be construed as research. The information presented is not a complete analysis of the global retirement landscape.
The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock, Inc. and/or its subsidiaries (together, “BlackRock”) to be reliable. No representation is made that this information is accurate or complete. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.
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