Many employers are concerned about how a lack of savings could force their older workers to delay retirement. For example, a study by BlackRock found that 59 percent of surveyed defined contribution (DC) plan sponsors reported having doubts that most of their employee participants are currently saving enough to ensure a comfortable retirement. Forty-nine percent of sponsors even said that they fear their organization is facing a “crisis” where older employees will work indefinitely because they simply cannot afford to retire.
Despite this apparent pessimism, 64 percent of surveyed employers said that they believe their workers are “very” or “extremely” informed about the amount of money that will need to be set aside to achieve old-age financial security, and 58 percent of sponsors reported being confident that employees are equally informed about how to generate this required level of retirement income. However, only 31 percent of surveyed workers reported that they feel “very” or “extremely” informed about how to save enough money for retirement, and 55 percent said that employers should provide more assistance with old-age financial planning. The latter sentiment was found to be much stronger among younger employees (63 percent for Millennials versus 47 percent for Baby Boomers).
That is not too surprising since only 36 percent of Gen-Y respondents said that they had increased their 401(k) contribution rates when the opportunity presented itself, and not even a quarter reported that they have fully evaluated their DC plan's available investment options and features. Sixty-five percent of plan sponsors acknowledged that participants could benefit from additional company-provided retirement help, and many employers have already taken steps to boost good savings practices. For example, roughly one in four plan sponsors said that they have incorporated automatic-enrollment, auto-escalation, and/or company matching features into their DC plan design. Six in ten employers also reported that they are interested in finding ways to encourage workers to continue to participate in the company's DC plan even during retirement.
Sources: BlackRockPost author: Charles Couch