After over two years of rising inflation, market volatility and a global pandemic, savers are looking for security and guidance when it comes to retirement. It’s an apt time to explore evolving attitudes towards retirement and see what’s changed from one unprecedented year to the next.
The 2022 Read on Retirement is more comprehensive than our past surveys. In addition to fielding data from plan sponsors, retirees and workplace savers -- those who have access to a workplace plan -- we also added an additional 1,300 independent savers. This new segment is comprised of people who are saving for retirement, but without access to an employer-sponsored plan.
We also added Gen Z, the youngest generation in the workforce, as well as an oversample of diverse respondents across both groups of savers, in order to better represent the population at large.
This year’s survey shows that attitudes toward retirement continue to evolve, with the findings falling into four key areas:
- Fastening our seatbelts: Retirement readiness amid market volatility and a pandemic
- Seeking security across a lifetime: The role of lifecycle investing and retirement income
- Broadening the toolbox: Evolving attitudes toward ESG, active and personalization
- Exploring equity in retirement: Retirement sentiment across independent savers, Gen Z and diverse populations
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Fastening our seatbelts
Inflation is the top concern for plan sponsors and savers alike – unsurprising, given the current environment. Employers are concerned that inflation might erode workers’ savings, and savers worry it might derail them from the road to retirement.
A less certain course
Retirement confidence is down, with fewer workplace savers seeing themselves as on track for retirement. It’s a reversal from the last few years where confidence remained steady and even increased, likely given strong market performance, despite the pandemic and the initial impact it had on workers.
63%
of workplace savers feel on track for retirement, down from 68% in 2021.
51% of independent savers feel that they are on track for retirement.
23%
of independent savers say the pandemic caused them to save less.
14% of workplace savers say the same.
Decrease5
Plan sponsors say the percentage of workplace savers on track for retirement is down to 58%.
This is a decrease from 2021, when plan sponsors reported 63% of workplace savers were on track.
Adjusting the economic sails
Given the current macro environment, it might be no surprise that savers have concerns around inflation. Yet, while a majority of workplace savers are unsure about the economic impact it may have, they are adjusting their saving and spending in response.
69%
of plan sponsors have concerns about inflation and worry it may wear down employees’ savings.
48% of plan sponsors say they are providing educational resources in response to inflation.
87%
of workplace savers report that they’re worried about inflation.
Only 39% of workplace savers say they have a strong understanding of the impact inflation can have on their ability to save and spend.
34%
of workplace savers who are worried about inflation have increased their savings rate.
20% adjusted retirement plan investments. 54% of workplace savers report that they are decreasing spending on big ticket items.
Seeking security across a lifetime
Amid increased market volatility and a decrease in confidence around retirement readiness, there is strong interest in the benefits target date funds provide. Access to professional management, trusting employers to choose the right investment, and having it as the default are a few main reasons workplace savers note for why they opt to invest in them.
A focus on lifecycle investing
Amid increased market volatility and a decrease in confidence, there remains strong interest in the benefits and access to professional management that target date funds can provide. Workplace savers appreciate them as a holistic solution. Yet there is a need to help all savers understand them more. Younger savers are the most curious about them and are more likely to be invested in one.
86%
of sponsors say it’s helpful to reallocate assets to more appropriate age-based investments.
Nearly half of plan sponsors encourage participants to consider target date funds.
27%
of workplace savers are unaware if they’re currently invested in a target date fund.
This underscores the need for additional education.
54%
of Gen Z say they are currently invested in a target date fund.
20% are not invested in a target date fund but are planning to do so soon. This is nearly double the percentage of Boomers and Gen X.
The broad desire for secure income
The majority of savers, both with and without a workplace plan, share an uneasiness about how to make savings last throughout retirement. This puts an even greater importance on generating income in retirement. Though many savers are thinking about ways to make their nest egg last, there is a general lack of knowledge about how to solve this difficult challenge. Plan sponsors feel responsible to help their workplace savers generate and manage their income in retirement and feel it has become more important due to the pandemic.
64%
of all savers are concerned about outliving their retirement savings.
This puts an even greater importance on generating income in retirement. There is a general lack of knowledge about how to solve the challenge of making savings last.
42%
added a retirement income option in the last 12 months.
32% are planning to add a retirement income option in the next 12 months.
90%
of workplace savers are interested in owning a product designed to generate income in retirement.
This is a slight increase from the start of the pandemic in 2020 when that number was 87%.
71%
of retirees would have chosen to receive a steady stream of income through retirement if offered.
46% say they would have benefitted a great deal from one.
Broadening the toolbox
Plan sponsors and workplace savers alike see ESG strategies as a way to manage risk and generate returns, taking a long-term view for long-term savings. In addition, active management is seen as a way to add value and as a vehicle for growth. Interest in personalized options for savers is growing.
Taking the long view with ESG
Interest in ESG remains high amongst plan sponsors and workplace savers, with half saying they would even increase their contributions to a workplace plan if available. ESG strategies are seen as a way to manage risk and generate returns, taking a long-term view for long-term savings.
75%
of plan sponsors say their investment policy statement requires at least some consideration.
Of plans that offer ESG-related investment options, 53% have a dedicated sustainable strategy available.
67%
of workplace savers would invest in dedicated sustainable investment strategies.
Diverse workplace savers also report a higher likelihood to invest in sustainable strategies (75% vs. 67%), as well as a higher likelihood to increase participation in their retirement plan if sustainable strategies were offered (61% vs. 50%).
The strategic appeal of active
With greater uncertainty around the level of returns to expect from the market, sponsors and savers alike are seeking ways to help navigate potential turbulence.
43%
of plan sponsors say active management adds value for investors.
It can analyze market data to identify trends, risks and opportunities.
79%
of workplace savers consider options that offer the most growth when choosing investments.
Diversification and generating income are other factors.
Optimizing for the individual
Personalization is a growing industry focus. Plan sponsors and savers show interest in options like managed accounts as a means to receive investment advice that considers each individual’s goals and unique circumstances.
68%
of plan sponsors offer a managed account in order to personalize employee’s investment portfolios.
97% of sponsors who do not currently offer them are somewhat interested, up from 88% last year.
24%
of workplace savers are not sure if their employer offers an option like managed accounts.
76% of workplace savers who are not sure if this is offered would be interested in using one.
Exploring equity in retirement
Greater access to a workplace retirement plan remains an opportunity in the U.S. retirement system, where an estimated 57 million workers1 don’t currently have access to save through an employer provided workplace plan. Our data shows that when people have a workplace retirement savings plan, they are not only more likely to feel on track for retirement but also have stronger retirement savings habits.
The benefit of access
The majority of respondents say that if they were given the option of investing in a 401(k) or 403(b) plan, they would use it to save for retirement.
51%
of independent savers feel on track for retirement compared to 63% of workplace savers.
17% of independent savers are not contributing anything toward their retirement.
68%
say that an employer match would be an important factor when accepting a job.
20% of independent savers are more likely to use a workplace plan if an employer match was offered.
Exploring equity in diverse populations
Our oversample of diverse populations found that while there were similarities about saving for retirement, there were also some notable differences. There is broad concern about inflation among all groups, but each has different ways of addressing it. Confidence in being on track for retirement is rooted in different reasons, such as different expectations of how much they’ll need. All groups are concerned about generating income in retirement.
65%
of Black/African Americans say they are on track with retirement, the highest of diverse groups.
57% of Hispanic/Latino and White respondents feel on track and just 51% of Asian and Pacific Islander respondents say they do.
51%
of Asian/Pacific Islanders and 50% of Hispanic/Latinos have or will decrease spending with inflation
Black/African American respondents are more likely to increase their savings rate (49%).
75%
of Black/African Americans and 71% of Asian/Pacific Islanders worry about outliving their savings.
67% of Hispanic/Latinos and 61% of White respondents said they are worried.
Gen Z looks toward retirement
This year we included Gen Z respondents to gain insight into the newest members of the workforce, many of whose entire post-graduate careers have been during the pandemic. Gen Z reports more familiarity with target date funds than other generations and are also more likely to be aware of ESG investing strategies.
Ultimately, this new generation of savers views retirement as important and has a new vision for what it entails. They connect retirement preparedness to their current well-being more than other generations. On average, Gen Z workplace savers are off to a strong start, putting away 14% of their paycheck. They are planning for the future but will need guidance on setting those retirement goals and how to reach them.
14%
The average percentage of their income that Gen Z workplace savers are putting away for retirement.
36% think they will need to have saved less than $250,000 for a comfortable retirement, much less than other generations.
72%
of Gen Z say they would save less for retirement if faced with other big-ticket goals.
But 80% say their retirement plan’s communications help them decide how to manage their savings.
69%
of Gen Z feel on track for retirement.
97% say that being on track for retirement positively impacts their overall well-being today.
Differences among genders
Men continue to have more confidence than women when it comes to saving for the retirement they want. Part of this may be due to the gender wage gap, and the fact that women’s jobs were disproportionately impacted by the pandemic, ultimately contributing to a retirement savings gap. Men are also more likely to make decisions on their own, whereas women crave coaching and advice.
53%
of female workplace savers feel on track for retirement compared to 73% of male workplace savers.
Men without workplace retirement plans are still more confident than women in their ability to retire with the lifestyle they want, though the gap narrows: 55% vs. 47%.
65%
of female savers say that having to generate income in retirement worries them.
That’s compared to 55% of men. Women are also significantly more concerned about outliving their retirement savings than men (68% vs. 60%).
65%
of women are not sure how to calculate how much spending they will do in retirement.
Only 54% of men feel the same way.
Download the 2022 BlackRock Read on Retirement Report
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