When the asset manager BlackRock surveyed 1,035 retirees and 1,002 workers in March about key attitudes and behaviors around retirement, the polls revealed that, in many ways, the reality of retired life is beating expectations and that, for many retirees, long-term participation in a defined contribution (DC) plan such as a 401(k) helps sustain critical aspects of retirement security and satisfaction.
Nearly six in 10 workers (58%) currently are not saving the maximum amount of money permitted by their 401(k) plan. At the same time, nearly three in 10 retirees (27%) agree they did not save as much in their plan as they could have — and nearly eight in 10 of them regret it.
Long-term participation in a DC plan can significantly affect retirement savings, the BlackRock poll shows. Among retirees, those who spent more than 20 years in the DC system are more likely than those with less time (five to 10 years) to say that they saved the amount of money permitted annually by their plan (79% versus 62%).
“The positive impact that DC has on retirement saving builds over time,” said Chip Castille, managing director and head of BlackRock’s U.S. and Canada defined contribution group. “We need to get workers into the DC system as soon as possible and maintain their maximum participation throughout their working years.”
The polls show that many of today’s retirees are successfully meeting the financial challenges of life post-employment. More than half (51%) of retirees are confident about having enough money to live comfortably in retirement, and four in 10 say they are somewhat confident they can make ends meet in retirement.
About eight in 10 retirees polled report having pension income, but defined benefit (DB) plans cover just 53% of the workers polled.
Only one-quarter of current workers are confident about having enough money to live comfortably in retirement, and just 14% are very confident that they are presently saving enough to get the monthly income they want in retirement. Despite this, nearly half of workers strongly agree that their plan provides an easy way to save; 46% strongly agree that their plan offers an incentive to save via the company match.
When it comes to the retirement savings exercise, as well as planning for retirement in general, 92% of workers believe they have something to learn from the experiences of today’s retirees. Many retirees practiced good “planning behaviors” when working, but a number of them did make some mistakes along the way, particularly in the area of saving. Nearly one in three retirees say they did not make a financial plan for retirement savings early enough in their work life and, of those, about eight of 10 regret it (32% call it a major regret).
Findings from the BlackRock survey are online.