Employers need to know a lot of things when putting a retirement plan in place for their workers — or tweaking or downright redesigning the one they already have. In Aon's "The Real Deal: 2018 Retirement Income Adequacy Study," researchers looked at retirement savings behavior and investment experience in retirement plans to identify retirement resources and needs for participants in private-sector retirement plans. Among their findings is the disturbing fact that just one out of three workers who participate in a retirement plan over a full career will be able to retire with a "reasonably adequate" income. If that's not enough to give plan sponsors pause, there's also this: Just 19 percent of workers are expected to have saved more than they need to see them through retirement. Another 15 percent will be "close enough, within 2x pay," to attain the amount they'll need to be able to get by "if they adjust their postretirement spending or supplement their retirement savings with assets outside their employer's plans." (Emphasis ours.) In other words, they won't have enough unless they cut back or find more money. But here's the kicker: Two thirds of employees are more than twice their pay away from having enough. And 46 percent are more than four times their pay below their target. They'll not only have to cut spending and save more, they'll also have to delay retirement. Not a pretty picture. And bear in mind that when the last study was done in 2015, the baseline retirement age it used was 65. The 2018 study has switched to 67, "to represent a more realistic retirement age for many people and to tie to Social Security's normal retirement age." In addition, the study made another change from 2015 -- it lowered "employees' expected rates of return by 0.5 percentage points — to 6 percent pre-retirement and 5 percent post-retirement — to reflect the lower long-term expectations in the market at large." And nearly half of workers still come out so short that they'll have to do more, much more, in order to have a decent retirement. In fact, the study says, "Workplace benefits and employee savings are not sufficient to meet retirement needs for the average participant." So what do employers need to take away from this study? Let's start with the five disturbing, but useful, numbers above. READ MORE: Retirement savings checklist: 15 things to know Backup plan needed for retirement saving strategy 5 quick facts about millennial retirement saving behavior
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
