Improvement in Retirement Outlook

Fifty-two percent of participants think they will be able to retire at their ideal retirement age, and the same percentage somewhat or strongly agree that their savings will then last through the rest of their lifetime, according to the 2018 DC Plan Participant Survey by J.P. Morgan Asset Management. This shows a marked improvement from 2012, when 30% expected to retire at the proper age, and 31% were confident their savings would last.

The survey also found that 30% of participants save as much as they can, and 12% intend to wait until they retire to figure out how to live on that savings. Fifty-one percent are willing to spend time planning but are unsure how to get started. Only 40% are very or extremely confident they know how much to save to achieve their retirement goals. Thirty-nine percent think they have estimated how much they will have saved by retirement; and only 34% have calculated how much monthly income their nest egg will generate.

Seventy-three percent think they should be saving 10% or more, but, among this group, 70% have so far failed to achieve this. Only 34% are very or extremely confident in their ability to select investment options, and just 39% can say the same about adjusting their savings as they approach retirement. Sixty percent want help with their investment strategy, including to leave most of the decisions to experienced investment professionals, and 40% want to take more of a hands-on approach as a do-it-yourself investor.

Twenty-five percent have not checked to see if their savings rate is sufficient; 33% have never changed their investment selection; 50% have reviewed their 401(k) in the past six months; and only 40% have considered making a change to their 401(k) in the past six months.

Seventy-nine percent believe their employer should encourage workers to contribute to the retirement plan. Fifty-eight percent think their employer should provide guidance on how much to save, and 44% think it should alert them if they are not saving enough. Only 19% think their employer should decide how much each participant should save.

Seventy-nine percent say their employer offers a match. Forty percent say their employer should change its match to a stretch match of 50 cents on the dollar up to 12%; 27% say their employer should not change its match formula but should encourage employees to save more.

Twenty percent say their employer should not change the match formula but send a message to employees who save only 6% that they should save more, and 13% say their employer should do none of the above. Thirty percent say that their company match is a contribution recommendation, and 21% say they set their contribution rate at the company match rate.

Although 25% of sponsors do not use automatic enrollment due to their fear of participant pushback, 82% of participants are either in favor of or neutral toward the strategy. Participant pushback keeps 20% of sponsors from using automatic escalation.