A new study from Voya Financial found that while the vast majority of plan sponsors (87%) think their participants are somewhat or very prepared for retirement, only 63% of participants feel the same.
“It’s become clear there is a disconnect between employers and their employees surrounding retirement readiness.”
Brian Houston, Voya Investment Management
“Inflation and continued market fluctuations remain a concern for many Americans, particularly for those nearing retirement,” said Brian Houston, senior vice president with Voya Investment Management, in a statement. “As a result, it’s become clear there is a disconnect between employers and their employees surrounding retirement readiness.”
The fourth annual study found more than half of the plan participants surveyed said inflation and the state of the economy will have a severe or major impact on their ability to save for retirement. Among participants over the age of 50, 37% said they are now planning to retire later than originally planned due to the effects of market volatility, inflation, and COVID. Additionally, retirement preparedness has an impact on participants’ overall financial confidence, the study found.
Sponsors’ top concerns were ensuring their plans comply with new regulations and that their participants are properly invested. They also cited the importance of reducing plan fees and expenses. Plan sponsors said the main effects of volatility, inflation, and COVID on retirement plans were an increase in participant investment changes and a higher demand for emergency savings benefits.
Voya says the research highlights the opportunity for plan sponsors and specialists to offer more education and solutions aimed at generating income and boosting retirement preparedness.
“Specialists and employers can consider these findings an opportunity to bring forward more retirement readiness support solutions, such as offering an expanded investment menu for workers nearing retirement that includes additional fixed income options, lower volatility equity options, and other strategies, such as managed accounts, to help employees on their path for a more secure financial future,” Houston said.
Nearly 90% of participants said they are somewhat or very interested in retirement income solutions, and 87% said they were interested in investment options that help provide income during retirement. Many (87%) are also interested in help with understanding how to generate enough income in retirement to maintain their current lifestyle.
Information shared through employers could help participants understand the options available to them and generate better outcomes. Many participants (82%) said they trust the retirement planning services offered to them by their employer and are confident their employer’s retirement plan will help them achieve their retirement goals. Also, 87% of participants are more likely to stay with their employer if they offer competitive retirement planning services and products.
SEE ALSO:
• Plan Sponsors Look for Personalized Solutions to Help Participants Reach Retirement Readiness
• Black and Latino Employees Experience Lower Levels of Financial Confidence: Voya