“Many individuals are forced into retirement due to job loss or health concerns for themselves or a family member,” says Kevin Chisholm, associate director at the Boston-based global analytics firm Cerulli Associates, which conducted the research. “This means that an individual needs to be prepared for retirement before the age they expect to retire.”
Cerulli’s research, reported in the latest Cerulli Edge: Retirement Edition, analyzes the regulatory changes within defined contribution (DC) plans over the past decade, how legal action is presenting a challenge for 401(k) plan sponsors, and fiduciary pressures faced by 403(b) plans.
“It is essential that DC plans continue to evolve to ensure retirement readiness for a majority of participants,” says Chisholm.
As part of its research, Cerulli recently surveyed participants of 401(k) retirement plans and found 37% of those age 55 and older believe they are not adequately prepared if suddenly forced into retirement. This includes 53% of participants in the 55 to 59 age bracket, which the retirement industry classifies as preretirees.
“The number of preretirees that are unprepared for retirement is staggering,” says Chisholm, pointing to findings that more than 75% of participants between the ages of 55 and 59 say they are either not prepared for retirement, or unsure if they are prepared.
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