Lincoln Financial Group’s 2017 Lincoln Retirement Power Participant Study showed that while most individuals are confident and optimistic about retirement savings, the majority of participants acknowledge they are not saving as much as they think they need to in order to meet their retirement savings needs. The study shows that competing financial priorities are the culprit creating this conundrum of confidence.
In 2012, when Lincoln Financial conducted the first Retirement Power study, only 29% of respondents reported being confident, and 45% said they were optimistic about their retirement savings. This year’s study found 39% of respondents say they feel confident, and more than half (55%) are optimistic.
Two-thirds of retirement plan participants understand that they should be saving at least 10% of their salary to stay on track, and 45% believe they need to save 15% or more. However, only four in 10 savers are saving as much as they think is necessary, and among the savers who are saving less than what they think they need, the majority (68%) would need to increase their savings by 5% or more to be on track.
The more competing priorities a participant reports, the less money they contribute to their retirement plan, according to the survey. Only 36% of individuals with eight or more competing priorities are contributing 10% or more to their retirement plan, but of those who have two or fewer priorities fighting for a share of their wallets, 59% are contributing at least 10%, and 40% are putting 15 percent or more away for retirement.
Student loan debt has a major impact on retirement savings, no matter how many other competing financial priorities a participant reported. Six out of ten people with student loan debt said it is keeping them from saving more for their retirement.
“Savers today face many financial pressures and the reality is that the majority of them are going to be responsible for their own retirement,” says Jamie Ohl, president, Retirement Plan Services, Lincoln Financial Group. “As an industry, we have helped people understand the importance of saving. Now, it’s up to us to help them save more so they can achieve the retirement they envision.”