BlackRock Survey

Overwhelming demand from workers, employers, and retirees for retirement income

A large majority of workers saving for retirement through their employers’ 401(k) plans want options that will help them generate income in retirement, according to the fifth annual DC Pulse Survey from BlackRock (NYSE: BLK).

According to the survey, 89% of defined contribution (DC) plan participants are interested in owning a product designed to generate retirement income, and almost 9 in 10 said having guaranteed income in retirement would have a positive impact on their financial well-being. Respondents who were already retired also weighed in – 76% say having secure income in retirement makes a bigger difference than they thought it would. And employers agree, with 96% of plan sponsors indicating that they feel responsible for helping participants generate and/or manage their income in retirement.

While the SECURE Act of 2019 reduced barriers for plan sponsors to offer in-plan income solutions, adoption has lagged – due, in large part, to the necessary (though unforeseen) reprioritization of HR and benefits departments in response to the pandemic. Encouragingly, though, 82% of those who do not currently offer a retirement income solution plan to add one in the next 12 months.

“Retirement income is a new frontier, and we’re encouraged that front-footed plan sponsors are embracing retirement income solutions - but the demand is much more urgent than the pace of adoption,” said Anne Ackerley, Head of BlackRock’s Retirement Group. “Workers saving for retirement today are concerned that they are going to outlive their savings, or that they may not enjoy a high quality of life in retirement. The time is now for companies to provide their employees with solutions that can help bring peace of mind.”

The Impact of the Pandemic

The survey results also demonstrate that COVID-19 had a negative impact on retirement preparation for some – and for those plan participants who were already behind in their savings, the pandemic exacerbated their concerns. More than half (52%) of plan sponsors who keep track of short-term 401(k) loan withdrawals said employees used their 401(k) for emergency spending needs during 2020. Coupled with other impacts of the pandemic, such as furloughs and suspensions of company matches, 61% of plan sponsors said at least half of their employees were negatively affected in terms of their retirement readiness.