Press Releases

BlackRock Defined Contribution Pulse Survey: Coming To Grips With The Fundamentals Goes A Long Way In Retirement Planning

Aug 31, 2016

The Roots of Retirement Uncertainty: Not Knowing How Much to Save or How to Generate Income

 

Women Highly Value but Under-Utilize Workplace Plan In Building Their Retirement Security

 

New York, August 31, 2016 – Only about half (52%) of individuals participating in defined contribution (DC) retirement savings plans believe they are “on track” for retirement – but retirement confidence is within reach for many more, according to a recent DC Pulse Survey by BlackRock (NYSE: BLK).

 

In BlackRock’s 2016 survey of 1,003 Defined Contribution (DC) plan participants, 28 percent reported feeling “unsure” about whether they are on track for retirement. But the survey revealed that when individuals are uncertain about where they stand, it’s often because they simply have not taken action on a few fundamental steps toward sound retirement planning – like determining exactly how much money they need to set aside and understanding how to generate income in retirement from their accumulated savings.

 

For example, people “unsure” about their retirement prospects are much more likely than those “on track” to admit that “I don’t know as much as I should about investing for my retirement” (66% vs. 38%) and “I don’t know how much money I need to save in order to fund the retirement I want” (68% vs. 32%).

 

Simple Steps Make a Big Difference

 

“Unsure” participants also are less likely to be taking proactive steps to improve their knowledge; for example, just 11 percent of those “unsure” have calculated the amount of money to set aside now for retirement (compared with 35% of those “on track”). Similarly, just a quarter of “unsure” individuals have developed a good sense of how to generate ongoing retirement income from their savings (vs. 68% of people “on track”).

 

“Our survey shows that taking a few simple steps with a DC plan can make a considerable difference for successful retirement preparation,” said Anne Ackerley, head of BlackRock’s U.S. & Canada Defined Contribution Group. “For many participants, moving from retirement uncertainty to confidence is a matter of education and resolve: learning more about your precise savings and income needs, and developing a plan to get there.”

 

According to BlackRock’s analysis, the link between a basic understanding of key retirement planning principles and retirement confidence holds true for people at all income levels – suggesting that such confidence is not simply a function of greater financial resources.

 

“Unfortunately, many individuals who consider themselves ‘off track’ face financial realities requiring support beyond their DC plan,” said Ackerley. “But the good news is that people who are unsure about their retirement standing may be able to build their confidence with relative ease – by working in the near term to close critical knowledge and saving gaps.”

 

Women More “Unsure” Than Men About Retirement Prospects

 

Among individuals who said they are “unsure” about being able to retire the way they want to, two-thirds are women. In fact, significantly more women said they are “unsure” about their retirement than said they felt “off track” (33% vs. 21%).

 

Women’s general sense of unease about retirement also translates into lower levels of confidence and retirement preparedness: They were less likely than men to report feeling confident about being able to retire by the age they want to, handle unexpected costs in retirement and enjoy the lifestyle they want.

 

“Unfortunately, the uncertainty that women feel regarding retirement seems only to have hindered their retirement savings and readiness,” said Ackerley. “The challenge now is to help female plan participants understand that there is a blueprint for getting on track.”

 

Women Under-Use – But Highly Value – Their DC Plan


Indeed, women who are “unsure” about their retirement acknowledged that they could be taking greater advantage of retirement tools and resources already at their disposal, particularly those available in their DC plan.

 

“Unsure” women were more likely than “unsure” men to agree that they don’t spend the time they should to understand their employer’s retirement plan (55% vs. 41%) and don’t feel that they are doing as much as they should with their plan (57% vs. 42%).

 

But women generally also put a very high value on their workplace plan. They were significantly more likely than men to say that their plan will be extremely or very important to ensuring a secure retirement (74% vs. 66%) and that it will be their biggest source of retirement income (58% vs. 51%).

 

“Clearly, there is a strong disconnect between how women are using their workplace plan and their expectations for its role in their retirement security,” said Ackerley. “Importantly, we can bridge this gap by encouraging plan sponsors to help their participants better understand their plan features and take full advantage of the many retirement resources already available to them.”


Plan Engagement Lags Among “Unsure” Participants

 

Across the board, “unsure” individuals are less likely than “on track” participants to engage with their DC plan – highlighting a key opportunity for people lacking retirement confidence to move into the “on track” camp.

 

Those “unsure” were less likely than those “on track” to say that they take full advantage of retirement savings guidance provided by their employer (43% vs. 67%) and also less likely to have increased their contribution in the past 12 months (35% vs. 47%). They also reported less engagement in evaluating their investment options (25% vs. 38%) and were less likely to report that they evaluate their investment options at least quarterly (29% vs. 50%).

 

“Our survey shows that plan engagement is a key vehicle for boosting retirement confidence – and that’s a critical message for plan participants and sponsors alike,” said Ackerley. “Individuals need to take greater advantage of the tools already available to them through their plan. And plan sponsors can feel confident that adding more and better tools for their DC participants is a worthy effort – because a robust, participant focused DC plan really does have the power to make a difference.”

About BlackRock
BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At June 30, 2016, BlackRock’s AUM was $4.890 trillion. BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. As of June 30, 2016, the firm had approximately 12,700 employees in more than 30 countries and a major presence in global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com | Twitter: @blackrock_news | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock

 

About the Survey
The BlackRock DC Pulse Survey is a major research study of 200 large and mega defined contribution plan sponsors and more than 1,000 plan participants in the U.S. executed by Market Strategies International, an independent research company. The plan sponsors who were interviewed had at least $300 million in assets, with nearly half of the respondents serving in benefits or human resources roles, and the rest in finance, investment or business management for their organizations. The 1,003 plan participants surveyed were employed full-time and participating in their employer’s 401(k), 403(b), 457 or 401(a) plan, with at least $5,000 in assets in their current account. All respondents were interviewed using an online survey. For the sponsor sample, the survey’s margin of error is +/- 6.9 percentage points; for the participant sample, it is +/- 3.1 percentage points.

 

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Contact: Farrell Denby

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