Data & Research November 10, 2015

Americans Misjudge Savings Needed for Retirement

About two-thirds surveyed believe they will need less than $1 million in today’s dollars in order to retire, or aren’t sure how much they will need.
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Americans have some wrong ideas about how much they need to save for retirement, according to a survey conducted by Morning Consult and released by the Financial Services Roundtable (FSR).

About one-third of respondents said they think they should be saving less than 10% for retirement, or aren’t sure how much of their paychecks should be devoted to retirement savings. About two-thirds surveyed believe they will need less than $1 million in today’s dollars in order to retire, or aren’t sure how much they will need. Only one-third believe they will need $1 million or more to support themselves in retirement.

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FSR notes that experts recommend workers aim to save at least 10% of their income toward retirement, and most Americans may need much more than $1 million in retirement as lifespans—and time spent in retirement—lasts longer.

However, the survey found Americans get a better understanding of their retirement savings needs as they age. Fifty-six percent of 18- to 29-year-olds think they should save more than 10% for retirement, 69% of those 45 to 64 know they should save more than 10%, and 79% of those older than 65 know they should save more than 10% for retirement. 

NEXT: Americans value workplace retirement benefits

The FSR poll shows workers highly value retirement benefits in the workplace, rating them as one of the two most important benefits employers can offer, along with health care, at 94% and 95%, respectively.

When it comes to helping employees save for retirement, 63% of workers think employers should match between 5% and 10% of an employee’s pay. Only 5% of workers said they would likely opt-out if they were automatically enrolled in an employer retirement plan. FSR says this highlights the significant influence employers can wield over their employees’ opportunities to secure their financial future.

The poll surveyed more than 2,000 registered voters nationwide, 87% of whom said schools should teach students more about how to save and spend money wisely.

Nearly 68% said 2016 presidential candidates have not been talking enough about ensuring Americans have a secure retirement.

Compliance November 9, 2015

Another Challenge to the DOL Fiduciary Rule

Congressional representatives seek to protect retirement investors and stall DOL fiduciary rule.
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In the wake of approval of a House bill opposing the fiduciary proposal of the Department of Labor (DOL), four Republican and Democratic lawmakers outlined a series of seven legislative principles they believe must govern retirement advice and retirement advisers.  

The congressional effort is the latest shot against the DOL’s measure, and the stated bipartisan concern is that the rule will make it difficult for low- and middle-income families to access financial advice so they can adequately plan for retirement. “We are concerned that the Department of Labor’s current fiduciary proposal may have unintended negative consequences that could harm individuals and families saving for retirement,” the House members—Peter Roskam (R-Illinois), Richard Neal (D-Massachusetts), Phil Roe (R-Tennessee), and Michelle Lujan Grisham (D-New Mexico)—said in a release.

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At the same time, the legislators said in their statement that individuals seeking investment advice must have strong protections. The four are working together to introduce a bipartisan legislative solution that reflects several investor-friendly principles, such as the requirement that retirement advisers work in the best interests of the investor, and the need for clear, plain-English disclosure of conflicts of interest in compensation or fees.

Another principle states that investor choice and consumer access to all investment services, such as proprietary products, commission-based sales and guaranteed lifetime income, should be preserved in a way that does not pick winners and losers.

The legislators cited the need for the retirement savings industry to make immediate changes upon the rule’s release. In the event the final rule has flaws, they said, there is a strong likelihood those changes could limit access to services and education for those saving for retirement.

The Financial Services Institute (FSI), which has previously registered its general dislike of the fiduciary rule, issued a response to the bipartisan effort. “We have said all along the DOL needs to get this rule done right, not done fast,” said David Bellaire, FSI’s executive vice president and general counsel.

Without specifying any details of the bipartisan legislative solution to come, the legislators said it would ensure that all Americans have access to financial advice for retirement planning, protect individuals from conflicted advice and require advisers to act in the best interests of retirement investors.

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