Even as workers define the state of retirement readiness in the U.S. as a “crisis,” a closer look at recent findings shows that the feeling may be more impersonal than anticipated.
A July survey by asset manager PGIM, which fielded responses from over 2,200 workers on the state of retirement savings in the U.S., found that 58% of respondents somewhat or strongly believe that “a national retirement crisis exists.”
While their conviction does in part stem from their own personal experiences (43%), the research finds that more speculate a crisis after hearing about the experiences of loved ones (52%). Others say that reading, listening, or watching media coverage on retirement has impacted their view on the state of retirement in the U.S. (42%).
In fact, 39% of respondents describe their retirement condition as a crisis, reports PGIM. Another one-third are indifferent to the notion, while 29% disagree with the idea of a crisis. Such perceptions are largely driven by age, with both Millennials and younger Gen Xers feeling the most hopeless about their personal retirement situation (47% vs. 46%, respectively).
The findings show a correlation between an individual’s personal experience vs. their perception of the national state of retirement. For example, 30% of respondents who are somewhat or strongly in crisis regarding their personal retirement are likelier to feel the same (87% of the 30% of respondents) regarding retirement for the U.S. population. Among those who do not define their retirement as a crisis, only 40% say there is a national crisis.
“Every person’s retirement is going to be different with different expectations, preferences, and situations,” said David Blanchett, managing director and head of Retirement Research at PGIM DC Solutions, to 401(k) Specialist. “One of the key takeaways from our latest survey exploring perceptions of the retirement crisis in America is how much a person’s individual situation is related to broader views about our national retirement system. In other words, people who are in pretty good shape for retirement tend to think the nation is doing pretty well, and vice versa.”
The amount of investable assets in savings is another driving component to how individuals think of their retirement, PGIM findings show. While 48% of retiree respondents aged 55 and over with no assets say their retirement is in deep trouble, this number lowers to 22% for households with between $10,000 to $50,000 in savings, to 11% for those with $50,000 to $100,000 in savings, and just 3% for investors with retirement assets of over $500,000.
While growing investable assets is key to retirement success, Blanchett emphasizes that retirement costs will differ based on expectations, needs, wants, and environment, and shouldn’t be restricted purely on what the broader population believes. As certain high-expense states could require a retirement nest egg of upwards $1 million, retirees in other low-cost areas could live on less.
Instead of viewing retirement as a “crisis,” Blanchett urges investors to consider it as a challenge that could be overcome through personal savings and by implementing retirement planning tools, as the availability of defined benefit (DB) plans decrease.
“A crisis creates a sense of hopelessness, but I think our situation as a country, and most household’s individual situation is anything but,” he said. “The sacrifices each household may have to make to get to retirement are very different, but I think we can get there. I don’t think we’re moving back to defined benefit plans, nor do I think any kind of mandated savings scheme is likely; therefore, each household has to take some level of personal responsibility when it comes to making sure they’re prepared for retirement.”
SEE ALSO:
- Are There ‘Hidden Costs’ in Pension-to-401(k) Shift?
- How America Saves? At a Record Pace in 401(k), Vanguard Finds
- Defending the 401(k)
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.
