As 2019 comes to an end, the Robin S. Weingast & Associates team is looking ahead to next year by reading the The American Society of Pension Professionals & Actuaries' "Current Trends in Retirement Income Planning."
This annual report takes a deep dive into data from Ascensus that illustrates how individuals are leveraging tax-advantaged retirement accounts, plan design features that promote positive savings behavior, and the overall progress people are making towards saving for retirement. In their survey of almost 90,000 retirement plans, here are the key takeaways.
Who's in the Best Shape?
Savers ages 55 to 64 made up the largest portion of those "on track," with more than 25% of those individuals finding that they were in a good position.
People under age 25 made up only 3% of "on track" savers, suggesting these individuals could benefit from ramping up their savings strategy as they advance in their career.
Acensus did acknowledge that they need to further understand how factors like student loan debt are affecting this group in particular.
20% of individuals who are "on track" in their retirement savings are between 25 and 34 (versus the 3% for the under-25 age group).
Acensus also found that awareness of savings options combined with access to planning tools has a positive effect on retirement savings. Even something as simple as a "retirement forecast" tool can make a difference: in 2018, 26% of first-time users of a retirement outlook tool were saving at an average rate of 8% within a few weeks of engaging with it.
Who participates and at what level?
You probably won't be shocked to learn that retirement plan participation is highest among employees in the finance and insurance industries. This is likely due to the awareness employees in these sectors have about the importance of financial and retirement planning.
Here is how each industry is doing when it comes to saving for retirement:
finance and insurance (72%)
utilities (68%)
professional, scientific and technical services (67%)
management of companies (66%)
transportation and warehousing (56%)
arts, entertainment and recreation (55%)
retail trade (55%)
food and accommodation services (36%)
Similarly unsurprising is the finding that finance and insurance employees carry the highest account balances of plans sponsored by their current employers, followed by those in the services industry.
Retirement Confidence and Workplace Impact
The study also found that more employees plan to work past retirement age due to decreased confidence in the security of their retirement plans, or concerns that they simply aren't saving enough. However, the study also found that most workplaces aren't prepared for this and may not be doing enough to help education their employees about retirement savings and how to transition from working to retirement, including providing:
educational resources (30%)
information about distribution options (28%);
retirement planning materials (25%);
an income annuity as a payout option in their retirement plan (17%)
Employers who want to assist their workers make a more seamless and confident decision should consider working with their TPA to provide these resources, and other helpful options such as online calculators, professional advise, mobile apps, and quarterly statements. Despite the rise of social media use, most survey respondents did not find information on social media particularly helpful or educational.
Looking to Increase your Retirement Planning Confidence?
Retirement planning is a key issue for everyone and whether you are a business owner looking to design a unique, custom plan or an individual looking to maximize your retirement savings and increase your retirement confidence, The Robin S. Weingast & Associates team can help. We specialize in developing innovative retirement plan solutions that will help you achieve financial peace-of-mind and help you create the future of your dreams. Contact us to find out how we can help.
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