Despite increases in retirement confidence, new research out today from BlackRock highlights gaps and surrounding uncertainty when retirement planning.
The ninth annual Read on Retirement survey surveyed respondents across multiple cohorts, finding that many continue to report confusion about their savings needs, including how much they should be saving for retirement and outliving their earnings.
The disparities where especially prevalent among women and male respondents, found BlackRock. According to the data, 59% of women believe they are on track for retirement compared to men. Additionally, 70% of women agree it is difficult to know how savings will translate into monthly income compared to 56% of men, and 65% of women worry they will outlive their retirement savings, versus 57% of men.
“Our research continues to underscore how complicated the path is for Americans when planning for retirement,” said Anne Ackerley, senior advisor on Retirement at BlackRock. “This is an important moment to rethink retirement, and we are committed to convening conversations around ways we can make retirement investing simpler, more accessible, and more affordable for as many people as possible.”
Younger respondents feel more secured
Gen Z were the likeliest to report feeling on target for retirement—77% are confident they’ll be able to achieve their desired retirement lifestyle. However, many continue to voice concerns, as 69% say they worry about outliving retirement savings and 60% aim to put off planning for retirement income until they retire.
Millennials were slightly more confident than they’re Gen X counterparts, with 56% reporting worries over outliving retirement savings. This could likely be because well over half (62%) are dealing with credit card debt, according to BlackRock.
Gen X, on the other hand, were the least likely to feel confident about their retirement. Sixty percent of Gen X respondents said they feel prepared for retirement, while 63% continue to worry about outliving their savings.
This generation was also less likely to partner with financial advisors for retirement planning, at only 40% who reported seeking advice. Gen Z respondents were more open to guidance, with 47% having worked with a professional financial advisor. Seventy percent of respondents from the youngest working group connected with their advisor through an employer.
Emphasis on retirement income
BlackRock’s research found that most Baby Boomers, the generation closest to retirement, reported feeling prepared for their golden years (68%). For generations following behind, many Boomers believe employers and advisors should communicate and educate participants about retirement income strategies. Of those who feel uncertain about their retirement, 58% are insecure about how much they should save and 51% are unsure about how much income they will need.
Over two-thirds (67%) believe they would benefit from receiving education on retirement income strategies “well before retirement,” and 94% of retired Boomers say plan sponsors should prioritize providing employees with secure income options through their workplace plans.
A greater number of employers are choosing to highlight lifetime income solutions as they search for ways to grow retirement savings for employees. In a recent PIMCO report surveying large institutional clients, 90% said the top priority for their clients is finding solutions for generating retirement income, a 21% increase over the previous year.
When asked why they are considering these solutions, 75% of respondents in PIMCO’s research say plan sponsors “want to provide participants with a range of options to meet their diverse retirement needs.” Fifty-seven percent add that many clients prefer the “liquidity and flexibility on a non-guaranteed product,” while 57% prefer the “lower cost and complexity of non-guaranteed products.”
“Confidence in retirement has varied for tahe last nine years—and while we have seen increases when markets are up—when we look at sentiment broken out by gender, generation, and access to a retirement savings plan, it tells a complicated story,” said Rob Crothers, head of U.S. Retirement, Global Product Solutions. “While there is no one, single retirement solution that works for all, we believe providing financial resources, strategies, and tools for all Americans is a critical first step in reducing complexity for those who are clearly struggling to understand their path to retirement.”
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.