American workers are increasingly recognizing the importance of retirement income, yet many are not yet in a position to take action to ensure their financial security, according to the 2014 Retirement Confidence Study released recently by the Employee Benefit Research Institute and Greenwald & Associates.
The survey found that 85 percent of respondents contributing to an employer-sponsored retirement plan found a product like the Department of Labor’s Lifetime Income Estimate Calculator— which estimates monthly lifetime income based on a participant’s current account balance, contributions to their account and the projected value of the account balance at retirement— to be useful.
In addition, more than half, 54 percent, of workers contributing to plans were able and willing to provide balance and contribution estimates in order to respond to questions about what the tools illustrated compared to the income levels they were anticipating.
While 81 percent of the workers who answered the questions said this estimate would not impact how much they saved, 17 percent said it would cause them to increase their contributions. Among the 27 percent of those who said the illustrated estimate was much less or somewhat less than expected, a little more than a third indicated they would increase their contributions.
"The main reason cited by workers at all income levels for not increasing their contributions is the need to pay for day-to-day expenses, particularly since many are living paycheck-to-paycheck," said Roberta Rafaloff, Vice President, Institutional Income Annuities at MetLife.
"This need should be a catalyst for both workers and plan sponsors to think about retirement assets in terms of income, and not just savings. After all, guaranteed income will be needed throughout individuals' retirements after their paychecks end. And with retiree debt on the upswing— since 2005 the number of retirees who consider debt a major or minor problem has increased from 30 percent to 44 percent—considering retirement income sources early is critical."
The RCS polled 1,000 workers and 501 retirees in its 24th annual measure of worker and retiree confidence about retirement. The RCS was commissioned by EBRI and underwritten in part by MetLife.