More Americans (37%) spanning generations and demographics feel unprepared or unsure if they are on track for retirement compared to the previous three years—and women are even less certain, according to a new survey.
Nearly half of women (47%) report a lack of confidence, according to BlackRock’s seventh annual retirement survey, The BlackRock Read on Retirement. Those concerns even took hold among those participating in a workplace retirement plan, down from peak levels (68%) during 2021. Among savers who did not have access to a workplace retirement plan, only 51% feel they are on track for retirement. The top reasons cited for why they don’t feel on track? Not earning enough to save (23%) and high cost-of-living expenses (17%).
That said, 63% overall felt they were on track compared with 68% a year ago—and 19% weren’t sure, a datapoint that has been pretty consistent since 2019.
Inflation is a key driver for the decline in confidence, with 87% of workplace savers reporting that they’re concerned about inflation affecting their retirement. These savers also report a decrease in spending on big ticket items (54%) and consumables (42%) as a result—20% have adjusted plan investments, while 34% have increased their savings rate. Nearly half (48%) of plan sponsors say they are providing educational resources for their participants in response to inflation conditions.
Nearly two-thirds of respondents (64%) are also worried about their nest egg lasting throughout their lifetime—a data point that is even higher among black/African American (75%), Asian/Pacific Islander (71%) and Hispanic/Latino respondents (67%). Likewise, a majority of plan sponsors (69%) reported they are worried about inflation wearing down their plan participants’ retirement savings.
Those looking for some good news will find it in the savings rate: Across generations of Americans currently in the workforce, the youngest workplace savers (Gen Z) are demonstrating the strongest retirement savings discipline. The study found that this group is setting aside an average of 14% of each paycheck, compared with 12% for other generations (Millennials, Gen X and Boomers). That said, a full third of Gen Z respondents believe they can retire comfortably with less than $250,000, compared with half of Baby Boomers, who reported they would need $1 to $3 million to retire. In contrast, 17% of savers with no access to a workplace plan are not contributing anything at all to retirement, compared with just 1% of workplace savers with access to plans.
Generation ‘Grasp’
Retirement confidence varies across generations, with a high percentage of Millennials (19%) and Gen X (22%) reporting they are not on track for retirement, compared with Boomers (12%). Plan sponsors report that on average, only 58% of their employees are on track for retirement, down from 63% in 2021. On the other hand, Gen Z, which was included in the survey for the first time this year, reported the highest level of confidence (69%) in their retirement outlook.
Interest in retirement income is higher than ever, with 87% of workplace savers willing to invest a portion of their retirement savings in exchange for guaranteed regular income payments (up from 71% last year). Similarly, 74% of employers said that retirement income has become more important to their employees, and 90% agreed that plan participants would benefit from a target date fund (TDF) that generates guaranteed retirement income.
E S ‘Gee’
Two-thirds (67%) of workplace savers say they would invest in dedicated sustainable investment strategies if they were on their plan menu. More than half (52%) say they would increase their savings rate if those options were available. Perhaps as a result, nearly three-quarters (72%) of surveyed plan sponsors which don’t currently offer those options are at least somewhat likely to consider doing so in the next 12-24 months. The most cited factor driving that consideration: recommendation from a consultant (42%). Roughly a third each cited mitigating risk for participants (35%) and participant demand (31%).
Only about half (53%) of women said they feel on track with their retirement savings, compared with 63% of all workplace savers and 73% of men. Among diverse groups, sentiment varies, with 65% of black/African American respondents, 57% of Hispanic/Latino respondents and 51% of Asian/Pacific Islander respondents saying they are on track for retirement.
The BlackRock Read on Retirement, formerly known as the BlackRock DC Pulse Survey, provides insights from a research study of more than 300 large DC plan sponsors, 1,300 workplace retirement plan savers, 1,300 independent savers, and 300 retired workplace savers in the United States. The survey is executed by Escalent, an independent research company. All respondents were interviewed using an online survey conducted March 25–April 30, 2022.
