401k Conflict—Workers Confident, Employers Concerned

Participants cite 'transforming accumulated employment savings into ongoing income' as top concern

401k, retirement, Blackrock, employeesWho's right?

Is there an employer-employee retirement perception gap?

Apparently so, if a new survey is any indication.

While strong market performance has helped fuel increasing optimism among American workers about their retirement prospects, many employers don’t share their upbeat view, according to the latest DC Pulse Survey from investment giant BlackRock.

Sixty-one percent of DC plan participants surveyed say they are on track to retire with the lifestyle they want, and nine in 10 say that they are confident in their overall financial situation.

However, participants cite “transforming accumulated employment savings into ongoing income” as a top concern.

For many participants, the performance of their investments is making a considerable difference. Nearly half of participants who feel they are on track point to their investments performing up to their expectations as grounds for their confidence, up 20 percent from just two years ago.

But many sponsors view things differently.

They see a rising number of plan participants who will have to delay retirement due to saving shortfalls, estimating that more than half of their participants will have to postpone, up from 34 percent in 2016.

“It remains to be seen if recent volatility has shaken participant confidence, but for the most part DC plan balances have retained the benefits of a multi-year bull market,” Anne Ackerley, head of BlackRock’s U.S. and Defined Contribution Group, said in a statement.  “Nevertheless, confidence can be empowering, and now is a perfect time to build on that confidence through action that can help keep participants on track regardless of the market cycle, such as increasing savings or building a retirement income strategy.”

As confident as they seem to be, participants express some substantive concerns regarding how to effectively address their spending needs in retirement.

Seven in 10 participants agree that their generation won’t have the level of retirement income that retirees formerly had.

Many are concerned specifically about the need to transform accumulated savings into ongoing income:  51 percent agree that “it’s difficult to know how my savings will translate into monthly income at retirement” and nearly half say “the thought of having to generate my own retirement income worries me.”

And for nearly half of participants, their primary retirement goal is simply not to outlive their money.

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