Annual Retirement Survey
What retirees have to tell us about the new world of retirement.
Retirement is changing. It is too easy, however, to focus on the uncertainty about where we are today in the new world of retirement and ignore how far we have come in overcoming the challenges.
That's one of the reasons BlackRock extended this year's Retirement Survey to include recent retirees for the first time. We asked retirees about what helped them prepare for retirement and what might have helped them even more. Our four findings are presented here.
It is a new world of retirement—but it still calls for the qualities that plan sponsors have always shown, including commitment and innovation. By acknowledging how retirement has changed, understanding the challenges we still face and taking responsibility for creating better outcomes for participants, we can evolve today's DC plans into tomorrow's comprehensive retirement solutions.
This year's Survey suggests a number of action items that we believe will help participants more clearly understand the relationship between the steps they can take today and the increased retirement security they will enjoy in the future. A number of these suggestions are below:
- Make it real - offer retirees as a role model: It is one thing to talk about deferral rates and retirement replacement ratios, but participants respond to real world examples. Offer "The Seven Essential Habits of Highly Confident Retires" as a model for participants to emulate. Let them know if today's retirees could do it, so can they.
- Add a secure income option: Today's DC plans do a great job helping participants save. Increasingly, however, the question is how to turn that accumulated savings into a retirement paycheck. With the clear importance of retirement income's role in building confidence for retirees, the time is now for in-plan income options.
- Implement auto features: Many participants are comfortable with their plan sponsor providing help and support for saving with auto features, such as auto-enrollment and auto-escalation. Consider implementation of these features to help make good behaviors automatic.
- Re-evaluate your target date fund: Target date funds (TDFs) embed a plan sponsor's investment help by automatically shifting participants into age appropriate portfolios as they get closer to retirement. But not all TDFs are created equal — which is why it is critical to choose one that accurately reflects your plan's objectives.
- Implement a full plan reenrollment: Reenrollment ensures that all participants benefit from the plan sponsor's best thinking, and is often met with positive response from participants. In fact, even those who opt out still look favorably on the plan sponsors actions.
- Promote good behavior through education: Use corporate and record keeper data to identify participants who are not saving enough, or who have inefficient portfolios. Tailor communications for each audience to promote optimal behavior and unlock participant action.
For Plan Sponsors and DC Advisors
Retirement Survey Results
Thought leaders from the BlackRock DC team discuss findings from this year's survey.
This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Any opinions expressed are as of May 2012 and may change as subsequent conditions vary. The information and opinions contained in this paper are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. This content may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this paper is at the sole discretion of the reader. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation.
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