Despite feeling more optimistic and confident about retirement, competing financial priorities are getting in the way of participants achieving their retirement savings goals, new research from the Lincoln Financial Group shows.
The 2017 Lincoln Retirement Power Participant Study, which looks at participant attitudes and behaviors around saving for retirement, finds that savers acknowledge they are saving less than they should be in order to stay on track with their retirement savings needs. The study shows that two-thirds of plan participants believe they should be saving at least 10% of their salary to stay on track, and 45% believe they need to save 15% or more. Despite this, only 4 in 10 participants are saving as much as they think is necessary.
Optimism and confidence have trended upward since 2012, when Lincoln Financial conducted the first Retirement Power study. In 2012, only 29% reported being confident and 45% said they were optimistic about their retirement savings, while today’s numbers show that 39% feel confident and 55% are optimistic.
As for why they don’t contribute more, 59% report that they can’t afford it and 38% say they have other financial goals that are more important, such as saving for vacation, an emergency fund or buying a house. The study notes that the more competing priorities a participant reports, the less they contribute to their retirement plan. More than 50% of those in the 20-49 age group report that they have five or more competing priorities. And for those respondents who have five to seven competing priorities, only 47% are contributing 10% or more to their retirement plan. This number drops to 36% for those who have eight or more competing priorities.
The study's authors point out that student loan debt has a major impact on retirement savings, no matter how many other competing financial priorities a participant reported, with 6 in 10 saying it is preventing them from saving more for retirement.
The study is based on a national survey of 2,509 full-time workers ages 21 to 70 who have been contributing to their current employer’s DC plan for at least one year.
