PLANSPONSOR - December 2018/January 2019 - 51

Total Pre-Retiree Household Retirement Savings in Each Account Type
$0
Current employer DC account
Previous employer DC account/s
IRA
Nonqualified plan
All other retirement accounts
Total Pre-Retiree Household
Retirement Savings Across
All Accounts
<$25k
$25k - $50k
>$50k - $100k
>$100k - $150k
>$150k - $250k
>$250k - $500k
>$500k - $1mm
>$1mm
7.5%
9.0%
14.5%
6.5%
11.5%
18.5%
17.0%
15.5%
Source: 2018 PLANSPONSOR Participant Survey
retirement accounts (IRAs), nonqualified
plans and other retirement accounts.
The findings show that the largest
percentage of savers (18.5%) have assets
equaling $250,000 through $500,000,
followed by 17.0% with $500,000 through
$1 million, and 15.5% with over $1 million
earmarked for retirement. None of those
participants have all of their savings in
their current employer's plan-meaning
their retirement readiness estimate could
present a far different picture to their plan
sponsor than what is the reality.
Interestingly, the most likely savings
option for these respondents, besides
their current employer plan, is an outside
IRA. Nearly two-thirds (64%) of respondents
have one. In fact, nearly 20% have
between $1 and $500,000 saved in one,
which may mean they rolled over retirement
accounts from previous employer
3.4%
58.2%
36.1%
85.1%
53.9%
$1 - $10k
13.5%
9.6%
12.5%
3.4%
6.7%
10.6%
13.5%
2.9%
14.9%
plans after leaving one or more jobs.
For those who have savings elsewhere,
the range in account size is vast.
For instance, 41.8% have money in a
former employer's plan. Almost as many
have between $100,000 and $500,000
in such a plan as have between $1 and
$10,000, representing a dramatically
different outcome.
Additionally, there are still pension
benefits being integrated into retirement
income for more than half of the
respondents-further complicating the
readiness assessments. More than onequarter
(27.3%) have accrued a pension
benefit from their current employer that
they expect to receive in the future; 14.4%
receive a pension benefit from either
a current or prior employer; and 9.5%
expect to receive a pension benefit from a
prior employer in the future.
But, as varied as the outcomes are,
56% of the respondents said they are
confident or very confident they will
achieve a comfortable and secure retirement
by their planned retirement age.
How different this participant outlook is
from the typically less optimistic employer
view of employee retirement readiness.
The survey's savings data-unavailable
to plan sponsors-explains much of the
discrepancy in confidence levels.
Asked at what age they hope/expect
to be able to retire and enjoy a comfortable
and secure retirement, 25% of the respondents
said age 65, while 51% said they
would like to retire after age 65, including
8% saying at 75 or later.
What this near-retiree participant
segment envisions for its post-employment
>$10k - $50k >$50k - $100k >$100k - $500k
19.2%
21.2%
9.1%
13.9%
4.3%
10.1%
>$500k
27.4% 15.4%
8.2%
17.8%
3.4%
8.2%
4.3%
6.3%
1.0%
6.3%
days is also interesting. Although 35.6%
said, at their retirement date they envision
a " traditional retirement " -i.e., retire
when you reach a certain age, usually corresponding
to eligibility for Social Security
benefits-the rest of the group was split on
its vision for later life.
" Semi-retirement, " defined as a flexible
lifestyle supported by income from
less demanding and/or more rewarding
work outside of one's current industry or
role, is the goal for 19.71% of this segment.
The next group, 18.3% of respondents,
would like a " modern retirement, "
defined as working only until having
saved enough to reach true financial
independence-in other words, not being
dependent on work income to cover anticipated
expenses in retirement.
" Delayed retirement " is expected by
14.9%, and nearly one in 10 (9.1%) anticipate
a " phased retirement, " hoping to
continue working, which might be what
is occurring with the 5.8% of the sample
set that are part-time workers.
How can plan sponsors help this
group of respondents, when they have
no true sense of whether these workers
will be provided for or not? According
to the survey, participants in this demographic
value their access to a retirement
plan and health insurance over other
employer benefits.
Other surveys have shown that
participants are more engaged when they
approach retirement, so if a plan sponsor
is concerned about acquiring more realistic
readiness figures, maybe the time
has arrived to ask participants for more
information. -PS
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