Study Shows Major Differences in How People and Their Employers View Their Retirement Readiness


retiree works on financial documents

retiree works on financial documents

The bosses who sponsor retirement investment plans think their employees are well prepared for retirement. However, many of those workers don’t feel the same way. This difference in opinion could cause a disparity on the decision-making side of employee retirement account management.

Do you have questions about building a retirement plan? Speak with a financial advisor today.

Retirement Readiness Findings From Voya’s Survey

A new survey from Voya Investment Management finds that 87% of the companies sponsoring pension plans, 401(k) plans or similar retirement offerings feel the workers participating in those plans are ready for retirement in some capacity. On the other hand, just 63% of those plan participants said they feel somewhat or very prepared for retirement.

Secondary findings from the survey help explain why people in retirement plans don’t feel quite as optimistic as the plan sponsors. Over half of plan participants cited inflation and economic factors as playing a major role in hindering their ability to save for retirement. Among those older than 50, more than a third (37%) said they expect to work longer and retire later because of the residual effects from the COVID pandemic.

As a result, plan sponsors reported a sizable hike in participants who were tapping their retirement accounts to make ends meet. In fact, 39% of them reported an increase in people taking hardship withdrawals, while 28% reported an increase in requests for loans from retirement accounts.

In addition, 30% of sponsors reported that employees had reduced the amount of money going into their accounts. Another 16% of sponsors said that employers in their plans had reduced or stopped altogether company matches in 401(k) accounts.

Other Important Details

retiree spends time with his granddaughter

retiree spends time with his granddaughter

“Inflation and continued market fluctuations remain a concern for many Americans, particularly for those nearing retirement,” said Brian Houston, a senior vice president at Voya. “As a result, it’s become clear there is a disconnect between employers and their employees surrounding retirement readiness.”

One aspect of those concerns was the high level of workers who said they lacked confidence when it came to making decisions about their retirement income options. When it came to specific aspects of planning their retirement finances, just one-fifth of the respondents felt very confident, while nearly one-third had no confidence in their ability to make those choices. Here’s a breakdown:

  • Converting savings to retirement income to avoid outliving funds

  • Understanding how much money is needed to retire comfortably

  • Minimizing taxes in retirement

  • Personalized strategies for drawing down my money in retirement

As a result, workers investing through workplace retirement plans said they need more help to determine if they’re ready for retirement and what they need to do to get there. For example, 87% of participants said they were very or somewhat interested in investment guidance, while 80% are interested in being able to consult a financial professional. (SmartAsset’s free matching tool can pair you with up to three vetted financial advisors who serve your area.)

Bottom Line

Voya’s study shows that companies that offer 401(k) plans, pensions and other retirement accounts think their workers are ready for retirement. However, talking to participants directly shows they lack the same level of confidence in their ability to plan their retirement finances.

Retirement Planning Tips

  • A financial advisor can help you build a plan for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Fidelity recommends that you have 10 times your annual income saved for retirement by age 67. To find out if you’re on track, try SmartAsset’s retirement calculator. This free tool will estimate how much you’ll have when the time comes to retire.

Photo credit: ©, © Peretiatko

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