Blog courtesy of Slavic401k, a retirement plan partner to Aspen HR.
More than half of near-retirees (adults aged 50 to 64) are worried a “great deal” about the Social Security system, according to Gallup, while only a third of survey respondents aged 18-29 expressed a similar concern about the program’s long-term availability. A possible optimistic interpretation of this sentiment gap is that young adults recognize they may still have adequate time left to set enough money aside to reduce or even eliminate their financial dependence on the government in old age. However, a key step that many young Americans have not taken is to determine exactly how much money they will need to achieve their desired standard of living in retirement.
Indeed, a separate Gallup poll found that 41 percent of working adults admitted that they have not given much thought to the amount of income they will need each year in retirement. Thirty-two percent of respondents said that they have at least tried to come up with a rough estimate of what their old-age income needs will be, and only 20 percent reported that they have actually made precise calculations (likely with the help of a professional financial advisor or an online tool). Similarly, just one in five surveyed workers said that they have projected the amount of retirement income their savings and investment accounts will be able to generate, while 40 percent reported that they have not given the issue much consideration.
Adjusting for age, older adults (60 and over) were much more likely than younger respondents (18-39) to say that they have spent time calculating their retirement income needs and whether their savings will be able to meet such requirements. Clearly these planning shortfalls will need to be addressed, and the sooner the better. On the bright side, 54 percent of Americans surveyed by MetLife said that they believe individuals are primarily responsible for their own retirement security, compared to only 27 percent who believe employers should ensure old-age financial security, and 19 percent who feel the government is responsible. The most common way that people will fund retirement is through some combination of individual savings accounts, employer-sponsored plans, and Social Security.
Respondents in the MetLife poll preferred workplace-provided plans 3-to-1 over government solutions, and even saving on their own was viewed more favorably than paying into Social Security. Although a majority of surveyed Americans believe it is mainly their personal responsibility to ensure a comfortable and financially secure retirement, many respondents still welcomed help from employers. In fact, surveyed adults were six times more likely to say that they want employers to be more involved (versus less involved) in providing for their retirement security in the next 5-10 years, and the report’s authors added that workers “want a trusted partner who can help them navigate retirement security, creating an opportunity for companies to help their employees plan and save.”
At Aspen HR, we provide HR Managed Services via our PEO and ASO solutions to Asset Management firms, RIAs, and alternative investment funds. Our white-glove service model enables our clients to truly focus on their core business while becoming best-in-class employers. Our specific services include HR compliance and consulting, employee benefits (medical dental, vision, life, disability, 401(k), and payroll administration.