ARLINGTON, Va., April 16, 2015—A new LIMRA Secure Retirement Institute research study finds that only 4 in 10 Boomers and Gen X workers, and only 3 in 10 Millennials know how much money they should be saving in retirement.
“Not surprisingly, our study found that the majority of Americans — no matter their generation — are not confident that they will be able to achieve the retirement lifestyle they desire,” said Cecilia Shiner, associate research director, LIMRA Secure Retirement Institute. “If consumers aren’t confident that they are doing the basics correctly — like saving enough for retirement — it is unlikely that they will be confident of their retirement prospects.”
The Institute found nearly half of Baby Boomers and 4 in 10 Gen X and Millennials who have access to a defined contribution (DC) plan are saving at least 10 percent of their income in their current DC plan. Across all generations, about 4 in 10 select their DC plan investments on their own. Millennials and Gen X workers are more likely to be auto-enrolled so their investments are automatically selected for them, while Boomers were slightly more likely to engage a financial professional to help them select their investments.
“LIMRA Secure Retirement Institute estimates that individuals could live upwards of 30 years in retirement,” said Shiner. “With 7 in 10 pre-retirees reporting that their social security and pensions will not cover their basic living expenses, it is concerning that more than half of Boomers have less than $100,000 saved for retirement and more than a third have less than $25,000 saved for retirement.” (See Generations Chart)
Only 1 in 10 American workers report being very knowledgeable about investments or financial products. Boomers and Gen X consumers were more likely to feel somewhat knowledgeable (51 percent and 46 percent, respectively) while more Millennials describe themselves as not very or not at all knowledgeable (49 percent).
“Across all generations, only about one quarter of workers are using a paid financial professional,” noted Shiner. “Prior Institute research has found that consumers who use a financial professional to plan for retirement are more likely to feel confident in their retirement security. Our research shows only 30 percent of Boomers have a retirement plan – and only a third of them say it is a formal one. Working with a financial professional to develop a retirement plan would likely improve preparedness and confidence for retirement.”
Findings based on a 2014 survey of more than 2,000 working Americans who are household financial decision-makers and aged 20 to 75.