American workers are increasingly confident about their prospects for a financially secure and satisfying retirement—but many are not prepared for a coming period of lower investment returns forecast by the financial services industry, according to the latest DC Pulse Survey from BlackRock.

More than half (56%) of plan participants believe they are on track to retire with the lifestyle they want and nearly seven in 10 expect to be able to save enough to meet their financial goals in retirement. However, participants’ optimism might be based on some flawed assumptions about future investment returns.

New consensus forecasts by Horizon Actuarial—based on a survey of 35 financial industry firms (including BlackRock)—suggest that, for the foreseeable future, stock and bond returns could be half that of recent decades. Yet, 66% of workers believe that over the next decade, returns on their savings will continue to be in line with what they have experienced in the past, while 17% believe they will experience even higher returns. Nearly two thirds (65%) of workers report they are unaware that industry expectations for future returns are notably lower than what they had seen or experienced in the past.

Many plan sponsors also have misperceptions about the likely return environment for retirement assets. Seventy percent of sponsors believe the annualized market returns for U.S. stocks over the next 10 years will be the same as or higher than the past. The same goes for bonds: 78% believe bond returns will remain consistent or be higher than they have been previously.

In the face of the new returns information, the confidence of both workers and sponsors slips. When presented with the forecasts, 39% of participants indicate they feel very or extremely concerned. Regarding the effectiveness of workers’ retirement planning, the survey shows that workers become less confident when it comes to such issues as whether they are saving enough to get a desired monthly income (32% confident vs. 44% initially) and taking an appropriate level of risk to meet retirement goals (33% vs. 53%). Similarly, the confidence of sponsors that workers are saving enough for the income they want drops 11 percentage points (to 38% from 49%).

Perhaps most concerning is that 70% of participants (as well as 54% of sponsors) say they do not expect to do anything different in the next 12 months to prepare for potential lower returns.

“Though plan participants are feeling positive about their retirement prospects, it’s critical that they understand how investment market realities are likely to demand significant adjustments in their retirement planning,” says Anne Ackerley, head of BlackRock’s U.S. and Canada Defined Contribution group. “If equipped with accurate information about what they’re up against—and good tools for meeting those realities—they can be much better positioned to take the right action steps to ensure a financially secure retirement.”

Both sponsors and participants separately suggest that, to some extent, it is the other group’s responsibility to address the issue. Nearly six of 10 participants (59%) rate “increasing the company match” on their plan contribution as the most helpful thing their employer could do to address the low-return environment, while 45% of sponsors say they would encourage participants to save more.

BlackRock recommends plan sponsors maximize plan design tools, including auto features and re-enrollment, to improve participant outcomes; revamp strategic communications to target participants at different life stages, whether they are nearing retirement or just beginning their careers; and restructure the company match and consider additional contributions to help manage the effects of reduced future returns.

For retirement plan participants, BlackRock notes that saving enough just to meet the company’s match likely won’t be enough. Participants should increase their savings rate and opt in to auto-escalation. Those employees who haven’t started saving in their workplace plans should do so now.

In addition, BlackRock says it’s critical to understand how a savings lump sum today will translate into an income stream tomorrow. Plan participants should use an income calculator to measure the gap between what they are on track to save and what they may need in retirement.

“Driving increased savings and maximizing the target-date fund option in [defined contribution] plans can make a meaningful difference in workers’ retirement planning,” says Ackerley. “In particular, target-date funds are an indispensable tool for ensuring that participants are properly invested according to their particular life stage as well as market conditions.”

The BlackRock DC Pulse survey is a research study of more than 200 large defined contribution plan sponsors and more than 1,000 plan participants in the U.S., executed by Market Strategies International.