Hardly a day goes by when a new study isn’t released detailing Americans’ woeful lack of retirement preparedness. This is particularly true (and most worrisome) in respect to those Americans who are closest to retirement: baby boomers.
A new report from Cerulli Associates indicates just how severe the problem is. The fourth quarter 2013 issue of the “Cerulli Edge-Retirement Edition” reveals that six in 10 “retirement income opportunity participants” (defined contribution plan participants age 55 and older) are not confident they are prepared for retirement.
“The number of pre retirees who are unprepared for retirement is staggering,” says Cerulli Associate Director Kevin Chisholm in a prepared statement. “More than 75 percent of participants between the age of 55 and 59 [indicate] they are either not prepared for retirement or they are unsure if they are prepared.”
The report notes that 37 percent of defined contribution plan participants ages 55 and older say they would not be adequately prepared if they were forced into retirement. This percentage includes more than half of the pre retirees — those ages 55-59.
More than 90 percent of 401(k) plan participants consider either their personal budget (47 percent) or a company match (45 percent) when determining how much to contribute to a 401(k) or other defined contribution plan account. Other factors that respondents cite when deciding on a contribution level include:
- The automatically set contribution rate (4 percent);
- The recommendation of a financial professional (2 percent);
- Do not know (2 percent);
- The recommendation of a family member or friend (1 percent).
The report adds that about 35 percent of households had a retirement income plan in 2012. Excepting those ages 60 to 69, those closer to retirement are only marginally more likely to have a retirement plan:
- Age 30 or less: 30 percent;
- Ages 30-39: 26 percent;
- Ages 40-49: 38 percent;
- Ages 50-59: 34 percent;
- Ages 60-69: 48 percent;
- Ages 70 and older: 37 percent.