More workers are optimistic about their futures in 2021 than they were last year. This makes sense given the circumstances of the pandemic in 2020 and the progress being made both on health and economic fronts.
American Century Investments® ninth annual Retirement Savers Study, comprised of responses from 1,500 full-time workers between the ages of 25-65, saving through their employer’s retirement plan and grouped by the categories of Baby Boomers, Generation X and Millennials, examined their expectations, worries and regrets about retirement savings and the impact of the pandemic.
Optimism Grows, but Concerns Remain
Market risk and longevity risk continue to be the top concerns for retirement plan participants. This may explain why, when it comes to taking withdrawals, 76 percent of the survey’s respondents would be more likely to leave their money in their 401(k) plan if given an in-plan withdrawal solution.
Environmental, Social and Corporate Governance (ESG) Investing
In terms of workers’ interest in ESG, more than half express an interest in having ESG investments as part of their retirement plan. Millennials and Gen Xers are most interested; participants with incomes of at least $100,000 also are interested.
Expectations, Worries and Regrets
Some three in 10 workers expect a better standard of living in retirement, yet four in 10 worry about running out of money. Many admit to saving less, particularly during their first five years of working, with six in 10 stating they saved less than they should have.
Perceptions of Employers, Plan Features
Ninety percent of participants at least somewhat agree that retirement plans are highly valued benefits; participants most likely to strongly agree are men, those with household incomes of $100,000 or more and those with assets of at least $500,000. Although four in 10 want a “kick in the pants” or a “strong nudge” to save more, Boomers are more likely than Millennials and Gen Xers to want to be left alone.
Two out of three people prefer an employer match over a salary increase, and eight out of 10 would rather have a retirement contribution than help with education costs.
Automatic plan features are also intriguing to participants. Two out of three believe companies should have automatic enrollment with a six percent default rate, and just over 60 percent believe employers should automatically enroll and automatically increase it each year. Also, four in 10 say enrollment, contributions, and default investments should be completely automatic for everyone.
Survey Methodology
The plan participant survey was conducted between March 8 and 19, 2021. The survey included 1,500 full-time workers between 25 and 65 saving through their employer’s retirement plan. The data was weighted to reflect the makeup of key demographics (gender, income, and education) among all American private sector participants between 25 and 65.
Data collection and analysis were completed by Mathew Greenwald and Associates of Washington, D.C.
American Century Investments’ 2021 Retirement Savers Study
A strategy or emphasis on environmental, social and governance factors (“ESG”) may limit the investment opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other portfolios that do not have an ESG investment focus. A portfolio’s ESG investment focus may also result in the portfolio investing in securities or industry sectors that perform differently or maintain a different risk profile than the market generally or compared to underlying holdings that are not screened for ESG standards.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
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