Workers Open to Automatic Features in Retirement Plans

Most American workers feel unprepared for retirement and are open to making changes to retirement plans, such as implementing automatic features, according to a new survey by Prudential Financial.
Prudential’s Sixth Annual Workplace Report on Retirement Planning found that half (51%) of American workers feel they are “behind schedule” in their retirement savings goals.

Older workers feel even more behind, as 66% of 55- to 64-year olds said they are lagging with their savings. Two-thirds (65%) of respondents older than 45 believe that they might need to work longer and retire later than expected in order to afford retirement.

Younger workers (age 21 to 45) are slightly more optimistic, with four in 10 feeling they are behind on their retirement savings goals, according to the survey.

Many polled workers still seem hopeful about retirement, although it might come later than planned. While only a slim number of respondents (19%) are “very confident” in their ability to retire comfortably, most are at least somewhat confident (66%). However, more than a third (34%) are not confident in their ability to retire comfortably—and almost half (43%) of those ages 45 to 54.

Open to Auto Features

Prudential found that workers are receptive to putting automatic features in retirement plans. “Today’s workers recognize the critical role played by their employment-based retirement plan and are keenly aware that the existing ‘do-it-yourself’ approach simply isn’t the best way to build or achieve retirement security,” said Christine Marcks, president of Prudential Retirement, in a release of the results.  “Importantly, workers seem comfortable giving up a level of ‘control’ if it might mean the potential for better outcomes over the long-term.”

Almost three-fourths (74%) are positive about automatic enrollment, according to the survey. Similarly 70% are positive about a default savings rate and 65% are positive about automatic contribution escalation.

Polled workers also overwhelmingly favor automatic asset allocation. Overall, close to six in 10 respondents would prefer an automatic approach to asset allocation in their workplace retirement plan, rather than trying to manage their investments themselves, Prudential found. More than half (59%) of the younger cohort is positive about automatic asset allocation (another 31% are open to the idea). Among older workers, 57% are positive and 28% are open to the idea.

Furthermore, Americans are receptive to automated retirement income solutions, according to Prudential. Of the surveyed younger workers, 71% are positive about an automatic retirement income approach, while 64% of older workers are positive.

The study polled 1,010 American employees in an online survey during October. The participants are a national random sample of heads of households selected from panelists in the TNS Online Access Panel. Respondents were age 21 to 64 and currently employed full-time for an employer offering a 401(k), 403(b), or 457 defined contribution retirement savings plan.