The New Finance of Longevity

Retirement Investors Holding the Line During Market Correction

Majority of savers in defined contribution plans are not planning to take drastic actions

A new study from Empower Retirement reveals that plan participants have not demonstrated large-scale movements away from their existing investments. Visit here for more information.

March 30, 2020 — GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)–Americans in defined contribution retirement savings plans are largely maintaining their investment positions and not taking overly drastic actions in response to market volatility caused by the COVID-19 (coronavirus) outbreak, show new studies from Empower Retirement.

In the midst of the coronavirus pandemic and its early toll on the economy, Empower Retirement asked more than 2,000 Americans March 16-18 who are saving in defined contribution retirement savings plans how they are reacting to the effects of the coronavirus. Those surveyed were not specifically individuals with any Empower Retirement account.

In a separate analysis of call center and web site traffic to Empower Retirement, plan participants have not demonstrated large-scale movements away from their existing investments.

The results show resiliency. Market confidence is higher among those with investments in a defined contribution plan, indicating a level of calm among long-term investors. Those surveyed are refraining from hasty action, saying they do not plan to sell or shift investments in light of current events.

Survey highlights:

  • 73% have no plan to sell investments or cash out
  • 62% of respondents plan to save more money or have already done so
  • 49% of Millennials have made new investments or plan to make additional investments
  • 66% do not plan to adjust their retirement plan horizon because of recent market events

“American retirement investors are showing great fortitude and showing a strong desire to stick to their plans, even in some very tough market conditions,” said Edmund F. Murphy III, Empower Retirement President and CEO. “This is not to say they are disinterested. Our customer call centers have seen a significant spike in calls. Americans with retirement savings plans are asking about other investment options available to them, they are checking their balances and they are inquiring about what we think the market is doing.”

A separate analysis of call center and web site traffic to Empower Retirement since the market downturn on Feb. 24 shows a base of retirement plan participants that is not taking significant action on changing the investments in their retirement plans. A 30-day study of Empower’s 9.4 million participants shows:

  • 99.3% have made no change to their retirement investments
  • 16% of Empower’s retirement plan and IRA customers have logged in to check balances
  • 3.5% of participants have changed their contribution rate
  • 2.1% increased the contribution rate
  • 1.4% decreased the rate with very few going to zero
  • There are generational differences in engagement. Among participants with balances totaling more than $250,000, the level of engagement with their retirement plan grows to 34%
  • Participants are accessing Empower’s education and planning tools with a 22% increase in web traffic into Financial Wellness toolset
  • Participants are looking for advice, with a 14% increase in individual advice engagements over average volumes

Advisors: Take The Long View

Murphy credited some of the resiliency to the work of financial advisors, the role of participant education programs and plan sponsors who have helped participants understand the long-term nature of retirement plans.

Americans with retirement savings plans are asking about other investment options available to them, they are checking their balances and they are inquiring about what we think the market is doing...

An analysis of calls fielded by Empower call centers shows that the most popular questions among retirement plan participants include inquiries about plan balances, questions about other investments available to them in their workplace retirement plan investment menu and questions about broader market activity.

Among the 2,000 surveyed by Empower, there is some concern about the long-term economy and job stability. Fifty percent of respondents are worried about losing their jobs, including 66 percent of Hispanic-Americans, 62 percent of Millennials and 57 percent of low income Americans. Those who have been impacted by previous market downturns are more concerned about economic and stock market volatility at 89 percent, compared to 74 percent overall.

Nearly one-third of respondents say the impact on the economy will be long-term, lasting more than a year before things are “back to normal” (31%). A similar number forecast that it would take 6 months to a year to reach that point (35%), while only 1 in 5 see it as a short-term 3 to 6 month blip (21%).

“We know confidence in the economy has taken a hit,” Murphy said. “But we are also optimistic about retirement savers thinking for their futures. We believe these are investors who understand the long-term nature of their retirement plan.”

 

 

 

About Empower Retirement
Headquartered in metro Denver, Empower Retirement administers $686.5 billion in assets1 for more than 9.4 million retirement plan participants, as of Dec. 31, 2019. It is the nation’s second-largest retirement plan record keeper by total participants (Pensions & Investments, April 2019). Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans; small, midsize and large corporate 401 (k) clients; non-profit 403 (b) entities; private-label recordkeeping clients; and Individual Retirement Account customers. For more information please visit www.Empower-retirement.com.
1As of Dec. 31, 2019. Information refers to the business of Great-West Life & Annuity Insurance Company and its subsidiaries, including Great-West Life & Annuity Insurance Company of New York and GWFS Equities, Inc. GWLA’s consolidated total assets under administration (AUA) were $686.5B. AUA is a non-GAAP measure and does not reflect the financial stability or strength of a company. GWLA’s statutory assets total $48.8B and liabilities total $47.3B. GWLANY statutory assets total $1.6B and liabilities total $1.5B.
Learn More:
To learn more about how we’re empowering plan sponsors and their participants to be more engaged in their retirement plans than ever before, call us at 800-719-9914.
Securities offered and/or distributed by GWFS Equities, Inc., Member FINRA/SIPC, marketed under the Empower Retirement brand. GWFS is a subsidiary of Great-West Life & Annuity Insurance Company and affiliated with Great-West Life & Annuity Insurance Company of New York, Great-West Funds, Inc.; Great-West Trust Company, LLC; and registered investment adviser Advised Assets Group, LLC.