In this edition of the RRC, we expand upon our recent post on retirement insights from J.P. Morgan and a few of the key findings of interest from their study. We will also give a glimpse of retirement readiness through the lens of a leader in the retirement services market. Let’s begin by asking a basic question…..
Did you know?…..
(According to the J.P. Morgan 2013 Defined Contribution Plan Sponsor Survey)
Almost 60% of plan sponsors said they have a “very high sense of responsibility for the overall financial wellness of their employees.”
yet….
Only 44% of plan sponsors say the “percentage of participants with account balances on track to replace at least 80% of their final salary in retirement” is an important criteria for evaluating the success of their DC plan.
and…
Only 1/2 of plan sponsors rate their plan as effective in “helping make sure employees have a financially secure retirement.”
Thus although employers are taking responsibility for financial health of their staff, either having enough to retire at 80% is too high a number or they don’t feel they can afford to do as much as they would otherwise like to be able to do for their employees. We at Sapers & Wallack, call this retirement readiness. Measuring retirement readiness will become more critical to determine the effectiveness of retirement plans in the future.
Plan sponsors might ask, “Will my participants be retirement ready?”
Participants should calculate what they would need to live on in retirement and start saving accordingly. They might ask am I on track to meet those needs?
As with many of life’s difficult questions, there’s no one correct answer or approach…. But, we’d like to share a few ideas from “Formulating Retirement Readiness”, a piece from The Principal.
