A nationwide poll conducted by BlackRock leads to findings that illustrate the problem of insufficient savings for retirement.
The survey of 1,035 retired Americans and 1,002 American workers participating in defined contribution plans found that most workers are failing to save as much as they could for retirement. It also found that nearly six of 10 workers (58%) currently are not saving the maximum amount of money permitted by their 401(k) plan. At the same time, nearly three of 10 retirees (27%) agree they didn’t save as much in their plan as they could have. What’s more, nearly eight of 10 of them now regret it.
The poll also shows that “while the retirement savings gap remains a troubling reality, long-term participation in a DC plan, including a 401(k), can have a significant, positive impact on retirement savings effectiveness,” according to the company.
“When it comes to saving for retirement, defined contribution plans are evidently making a difference—a difference that we believe is more and more vital as fewer workers are covered by traditional pensions,” Chip Castille, managing director and head of BlackRock’s U.S. and Canada Defined Contribution Group, said in a statement. “But clearly there is more work to be done in motivating workers to make the most of the savings potential of their DC benefit. Sufficient savings is the single most important factor in leading to a comfortable life in retirement.”
It also finds that many of today’s retirees are successfully meeting the financial challenges of life post-employment. Just over half (51%) of retirees are confident about having enough money to live comfortably in retirement, and about four in 10 say they are somewhat confident they can make ends meet in retirement.
But only one quarter (25%) of today’s workers are confident about having enough money to live comfortably in retirement and only 14% are very confident that they are saving enough now to get the monthly income they want in retirement.
Importantly, about eight of 10 retirees polled report having pension income, but defined benefit plans cover just 53% of the workers polled.