Retirement isn’t always an even playing field, and we can always seek better outcomes. That’s why BlackRock reimagined our annual DC Pulse survey to provide a more accurate “Read on Retirement” and what it means for more and more people.
Insights from the inaugural 2022 BlackRock Read on Retirement reveal a shifting landscape following over two years of market volatility, inflation, and a pandemic.
The pandemic and recent market conditions understandably caused people to rethink their outlook on retirement and what they’ll need. It also inspired employers to offer more strategies to help employees save for the short and long-term.
These four key findings from the survey are trends to watch this year and beyond:
Fastening our seatbelts
Retirement confidence held steady through the pandemic, but continued uncertainty and more turbulent market conditions may be catching up to individuals. For the first time in years, workplace saver confidence in being “on track” dipped five points, falling to 63% from 68% just a year ago.
Inflation, coupled with higher levels of market volatility, may be a key driver of that decline. It’s causing savers to take pause and realize their path to retirement may not be as steady and certain as they’ve come to expect.
87% of workplace savers report they are worried about inflation. And of those worried, nearly half report they’re reducing their spending on big-ticket items and consumables. There is a bright spot in that nearly a third are looking at or already have increased their savings rate.
But the people most concerned about inflation may not be who you expect. Just three in four Baby Boomers report the pandemic and current inflation have affected their attitude towards retirement saving. Meanwhile, 90% of Gen Z says the same.
Savers seek security across their lifetimes
Attention tends to focus on the decades that Americans spend saving for retirement. Now they’re overwhelmingly asking for support when it comes time to spend that nest egg as well, with 80% of workplace savers looking for help to get through retirement, not just reach it. One of the biggest concerns is making sure that they have enough to last through retirement without outliving their nest egg.
Recent market volatility hasn’t made that equation any easier, with 67% of workplace savers citing uncertain market conditions during the pandemic as a reason they feel less confident. It might be why interest in guaranteed retirement income solutions has increased this year. 87% of workplace savers they’d be willing to invest in one compared to 71% last year.
In response to this growing demand amongst their participants, plan sponsors are turning toward the target date fund (TDF) to help meet these needs for greater security. 90% say that their savers would benefit from a TDF that generates guaranteed retirement income. 86% even say decumulation is a key consideration now when selecting a TDF for their plan.
The benefit of access
Workplace retirement plans help, but how well? The 2022 BlackRock Read on Retirement suggests a good amount. Just 51% of independent savers preparing for retirement without access to a workplace plan say they are on track compared to 63% of workplace savers.
Access to retirement planning tools, a feature common to workplace plans, would help boost the confidence of 36% of independent savers. The biggest appeal comes in the form of employer matching to help them get on track though. In fact, 68% consider an employer match an important factor when considering their next job.
A new generation looks toward retirement
The retirement saving landscape is expanding as Gen Z enters the workforce. These young individuals grew up being told to save early and often, and they’re taking saving seriously. On average, Gen Z reports they save 14% of their paycheck which places them slightly ahead of other generations saving 12%.
It’s also clear that they’re taking the long view, with 97% saying that retirement security contributes to their well-being today (only 86% of Millennials report the same).
That doesn’t mean they have the perfect picture of how much they may actually need though. 36% of Gen Z say they would require an amount under $250,000 saved to meet their goals. Meanwhile, nearly half of Baby Boomers say they need a nest egg of $1-3 million for a comfortable retirement.
The other warning sign? 72% of Gen Z is willing to save less for retirement if faced with other big-ticket goals. So while they’re off to a strong start, extra education may be needed to help them understand their retirement needs and stay on course.
The 2022 BlackRock Read on Retirement insight report digs into these four trends and more to better understand the needs and concerns of savers. All so that we can build a better retirement for all together. Explore the findings to help see how different tools and solutions might benefit savers.
The BlackRock Read on Retirement provides insights from a research study of over 300 large defined contribution plan sponsors, 1,300 workplace retirement plan savers, 1,300 independent savers, and 300 retired workplace savers in the United States. The survey is executed by Escalent, an independent research company. All respondents were interviewed using an online survey conducted from March 25-April 30, 2022.
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 herein are subject to change at any time due to changes in the market, the economic or regulatory environment or for other reasons.
The material does not constitute investment, legal, tax or other advice and is not to be relied on in making an investment or other decision.
Investing involves risk, including possible loss of principal.
Asset allocation models and diversification do not promise any level of performance or guarantee against loss of principal.
The opinions expressed in third party articles or content do not necessarily reflect the views of BlackRock. BlackRock makes no representation as to the completeness or accuracy of any third-party statement.
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See Also:
- Demand Growing for Guaranteed Income Solutions in 401ks: BlackRock
- Retirement Savings Rates Up, But Confidence Down: BlackRock
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