A LIMRA Secure Retirement Institute survey reveals that 8 in 10 U.S. workers believe that defined contribution (401(k)-type) plans are an effective way to save for retirement. Participation is strong as nearly 88 percent of eligible workers have a balance in a DC plan according to an American Benefits Council survey.
Saving for retirement is a top financial priority for 64 percent of Americans, according to prior LIMRA research, and many of them rely primarily on a DC plan to achieve their retirement savings goals. In fact, 6 in 10 workers who participate in a 401(k) or other DC plan said they would likely achieve a secure retirement and more than three quarters believe all workers should have access to a retirement savings plan.
Over the past three decades, employers have been shifting from offering defined benefit plans to DC plans, transferring the responsibility to save to employees. Our research found that 78 percent recognize their personal responsibility; yet half of the workers say they do not know how much they need to save to achieve a secure retirement.
In a world of conflicting information and competing financial priorities, workers are getting the message on the importance of saving for retirement. Yet, despite the large amounts of money spent on participant education, there is still a significant percentage of workers who do not know how much they should be saving and many are not confident that they will achieve their desired retirement lifestyle. Through the use of technology, the industry could examine new ways to translate account balances and savings rates into retirement income projections. This change in focus could help participants better understand the future impact of present day saving.