The 2022 Retirement Landscape Takes Shape

The U.S. faces a $4 trillion retirement savings gap heading in the new year, but both public and private solutions are coming online to help more people prepare adequately for life after work.


The widening retirement savings gap, improving financial wellness and adjusting to lower return expectations are three themes shaping the U.S. retirement landscape going into 2022. A new study shows the events of the past two years have either accelerated these themes or shined a spotlight on them, and the response of individual savers, employers and those that advise them is evolving as well.

According to T. Rowe Price’s 2022 “U.S. Retirement Market Outlook” study, the retirement savings gap—i.e., the difference between what retirement savers need and what they have accumulated—is now approaching an estimated $4 trillion, exacerbated by recent economic shocks. While defined contribution (DC) plans are now the vehicle most individuals use to accumulate wealth for retirement, only 64% of private-industry workers have access to one, such as a 401(k)—and even those with access may still come up short in meeting their retirement needs.

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The T. Rowe Price study notes that almost 40% of workers overall are not covered by any workplace retirement plans, but there are some notable differences according to the labor sector. For starters, larger businesses are more likely to offer DC plans than smaller business. According to the study, 78% of workers at companies with more than 100 employees are covered by DC plans, compared with 51% of those who work for companies with fewer than 100 people.

The top 20% of wage earners, or those making an average of $140,000 per year, are twice as likely to be covered by a DC plan than the lowest-earning 20%, who make an average of $27,000 per year. White households were measurably more likely to hold retirement accounts than Black households and more than twice as likely as Latino households to do so. Women, too, face challenges in accumulating sufficient wealth for retirement, due to fewer years in the workforce, for example as a result of child care and other care obligations, as well as historic wage inequality.

Lack of access to a retirement plan may be a significant challenge, but it is not the only one many people encounter when saving for retirement. Longer lifespans in retirement are putting pressure on workers to have more money put away, such that this is the top concern cited by both industry professionals and employers, including when they are choosing default investment options.

Financial Wellness

As the retirement plan landscape evolves, financial wellness is increasingly seen as a critical solution to help workers and retirees meet their goals. There is a growing recognition that the retirement savings gap is unlikely to be erased without improving the shorter-term financial wellness, resiliency and well-being of those enrolled in DC plans. Simply put, T. Rowe Price says, the pandemic has woken up the industry to the importance of financial wellness, as those who needed money during the past two years might have tapped into their retirement savings.

Employers are struggling to recruit and retain workers who are looking for new opportunities. For a variety of reasons, the competition for labor is more intense than ever, and the situation shines a spotlight on the need for employers to offer more competitive benefits, including those tied to comprehensive financial wellness. T. Rowe Price finds there has been an acceleration in the adoption of these programs, as 59% of industry professionals expect the demand for financial wellness programs to grow.

The study shows that 78% of employees rely on their workplace for advice and support on how to achieve lifetime financial goals. About half of workers reported moderate to high levels of financial stress related to managing debt and health care expenses, budgeting, saving for retirement, managing their investments and other goals, which has led to consequences for both the struggling workers and their employers.

Wellness and Employee Engagement

According to a study by Willis Towers Watson (WTW), workers who are struggling financially lose 44% more work time to absences than peers without financial worries. Similarly, workers who are struggling financially have lower engagement levels at work than peers without financial worries. Of all workers surveyed, 53% indicate that saving for retirement is the area they most want help from their employer.

As demand for financial wellness programs is expected to grow, employers are well-positioned to help their workers with advice and support. The research from T. Rowe Price shows that, during the early days of the pandemic, 47% of workers said their level of financial stressed increased, with 39% seeing a reduction in pay, 23% missing one or more monthly bill payments and 23% of savers tapping into retirement savings to pay for day-to-day expenses.

Of those surveyed, 9% used at least one of the coronavirus relief package provisions that allowed workers to withdraw funds from their retirement accounts without penalty. Nearly a quarter (23%) of those who withdrew money, mostly between the ages of 40 and 50, claimed they would replace the amount withdrawn. However, by the end of 2020 less than 1% had done so.

Positive participant views of digital education content on financial wellness topics increased from 15% in the first quarter of 2020 to 49% in the second. Content on managing debt, emergency savings and financial wellness checklists were of particular interest. This makes sense, T. Rowe Price says, as the struggle to balance competing financial needs is having a significant impact on employees. Of those who are not saving, 31% cite day-to-day living expenses, 14% cite credit card debt and 11% cite student loan debt as the primary reason why.

The full study, “U.S. Retirement Market Outlook,” is available here.

Launch Announced for MarylandSaves State-Run Retirement and Emergency Savings Program

The plan will automatically convert savers’ assets to a monthly paycheck at retirement unless they opt out of doing so.


Josh Gotbaum, chair of the Maryland Small Business Retirement Savings Program, and a former director of the Pension Benefit Guaranty Corporation (PBGC), announced that MarylandSaves will begin offering its new automatic workplace retirement and emergency savings program next summer.

Building on the experiences of programs in other states, MarylandSaves will be the first such state-run program that helps people have reliable income after they retire, according to the announcement. Savers in the program will automatically have their assets converted into a monthly paycheck at retirement age unless they choose otherwise. They will also have an option to increase their Social Security payments by deferring Social Security enrollment and receiving their MarylandSaves funds first instead.

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The program also differs from other state programs in that it focuses on helping employees build emergency savings first. Initially, funds will go into an emergency savings account using the Lincoln Financial Stable Value Fund. This fund currently has a guaranteed interest rate of 1.4% and there are no separate investment fees. After the emergency savings account has been funded, the participant’s contributions will be invested in the age-appropriate BlackRock target-date fund (TDF). Optional investment choices include an income fund (State Street Aggregate Bond Index Fund, Class K) and a growth fund (T. Rowe Price Global Growth Stock Fund).

MarylandSaves is a state-sponsored program designed to make it easy for businesses to offer their employees a voluntary, automatic, low-cost, portable retirement and emergency savings plan. Under Maryland law, established businesses that use an automatic payroll system are required either to offer a retirement plan or to sign their employees up for the MarylandSaves program. Businesses that do so will receive $300 per year via a waiver of the Maryland business annual filing fee. Employers will have no payment obligations, have no federal reporting requirements and will pay nothing to MarylandSaves for the service.

Employee participation is completely voluntary. Employees are automatically enrolled, but they can withdraw funds, choose investment options, change their savings amount or opt out entirely at any time. The announcement says account fees will be lower than commercial alternatives, and savers keep their accounts when they change jobs.

The program will be administered by a team composed of Vestwell, Sumday and BNYMellon, which the announcement says were selected after a rigorous competitive process. All savings will be professionally managed at negotiated rates by BlackRock, State Street Global Advisors, Lincoln Financial Group and T. Rowe Price.

Maryland joins other U.S. states (California, Connecticut, Illinois, Massachusetts New Jersey, New York, Oregon, Vermont and Washington) and two cities (Seattle and New York City) that have enacted legislation or set up the retirement programs to help close the retirement plan coverage gap. The states’ efforts are in addition to efforts from a new generation of providers—i.e., nontraditional recordkeepers—that are using technology to make offering a retirement plan cheaper for businesses and to bring employers more flexibility, as well as legislative efforts to ease administration through pooled employer plans (PEPs).

A survey from the National Institute on Retirement Security (NIRS) finds strong support for new state-facilitated retirement programs aimed at helping workers without employer-provided plans save for retirement. Seventy-two percent of Americans agree that state-facilitated retirement savings programs are a good idea, with high support across party and generational lines. Three-quarters of survey respondents say they would participate in these retirement programs if they were offered in their state, and most express favorable views of features such as portability and low fees.

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