Inflation fears reduce retirement savings and confidence

More Americans (37%) of all generations and demographics feel unprepared or unsure if they are on track for retirement compared to the previous three years — and women are among them. even less certain, according to a new survey.

Almost half of women (47%) report a lack of confidence, according to BlackRock’s seventh annual retirement survey, BlackRock’s reading on retirement. These concerns have even taken hold among those who participate in a workplace pension plan, down from record highs (68%) in 2021. Among savers who did not have access to a workplace pension plan work, only 51% believe they are on track for retirement. The main reasons given for why they do not feel on the right track? Not earning enough to save (23%) and high living expenses (17%).

That said, 63% overall felt they were on the right track, up from 68% a year ago, and 19% weren’t sure, a fairly consistent data point since 2019.

Inflation is a key driver of declining confidence, with 87% of workplace savers saying they fear inflation will affect their retirement. These savers also report a decrease in spending on large items (54%) and consumables (42%): 20% have adjusted plan investments, while 34% have increased their savings rate. Almost half (48%) of plan sponsors say they provide educational resources to their members in response to inflationary conditions.

Nearly two-thirds of respondents (64%) also worry about the sustainability of their nest egg over their lifetime, an even higher data point among Blacks/African Americans (75%), Asians/Islanders Pacific (71%) and Hispanic/Latino respondents (67%). Similarly, a majority of plan sponsors (69%) said they were concerned that inflation would deplete their plan members’ retirement savings.

Those looking for good news will find it in the savings rate: Among the generations of Americans currently in the workforce, the youngest savers in the workplace (Gen Z) show the most discipline when it comes to saving. ‘pension saving. The study found that this group saves an average of 14% of each paycheck, compared to 12% for other generations (Millennials, Gen X and Boomers). That said, a third of Gen Z respondents think they can comfortably retire on less than $250,000, compared to half of baby boomers, who said they would need $1-3 million. to retire. By contrast, 17% of savers without access to a corporate plan contribute nothing at all to retirement, compared to only 1% of corporate savers with access to plans.

Generation “Grasp”

Retirement confidence varies across generations, with a high percentage of Millennials (19%) and Gen Xers (22%) saying they are not on track for retirement, compared to baby boomers (12%). Plan sponsors report that, on average, only 58% of their employees are on track for retirement, down from 63% in 2021. On the other hand, Gen Z, who was included in the survey for the first time this year, reported the highest level of confidence (69%) in their retirement prospects.

Interest in retirement income is higher than ever, with 87% of workplace savers willing to invest a portion of their retirement savings in return for guaranteed regular income payments (up from 71% last year) . Similarly, 74% of employers said retirement income has become more important to their employees, and 90% agreed that plan members would benefit from a target date fund (TDF) that generates guaranteed retirement income. .

ES ‘Gee’

Two-thirds (67%) of workplace savers say they would invest in dedicated sustainable investing strategies if they were on the menu of their plan. More than half (52%) say they would increase their savings rate if these options were available. As a result, nearly three-quarters (72%) of plan sponsors surveyed who do not currently offer these options are at least somewhat likely to consider doing so in the next 12-24 months. The most cited factor behind this consideration: a recommendation from a consultant (42%). About a third each cited participant risk mitigation (35%) and participant demand (31%).

Only about half (53%) of women said they felt on track with their retirement savings, compared to 63% of all workplace savers and 73% of men. Among the various groups, sentiment varies, with 65% of Black/African American respondents, 57% of Hispanic/Latino respondents and 51% of Asian/Pacific Islander respondents saying they are on track for retirement.

The BlackRock Read on Retirement, formerly known as the BlackRock DC Pulse Survey, provides insights from a study of over 300 major DC plan sponsors, 1,300 workplace retirement plan savers, 1,300 savers self-employed and 300 retired workplace savers in the United States. The survey is conducted by Escalent, an independent research company. All respondents were interviewed using an online survey conducted from March 25 to April 30, 2022.