Savers know they are saving less than they should be, despite feeling more confident overall about retirement
RADNOR, Pa. (June 8, 2017) — Lincoln Financial Group announced today findings from its 2017 Lincoln Retirement Power® Participant Study, which showed that while individuals are more confident and optimistic about retirement savings, the majority of participants acknowledge they are not saving as much as they think they need to in order to be on track with their retirement savings needs.
The study shows that competing financial priorities are the culprit creating this conundrum of confidence.
The picture is not completely bleak, however. Optimism and confidence have trended steadily upward since 2012, when Lincoln Financial conducted the first Retirement Power study. Five years ago, only 29 percent reported being confident and 45 percent said they were optimistic about their retirement savings. Fast forward to today, and 39 percent of respondents say they feel confident and more than half – 55 percent – are optimistic.
A disconnect between feelings and actions
“It’s good news that retirement savers are feeling more positive about their retirement savings, but there is a real disconnect between their feelings and their actions,” said Jamie Ohl, president, Retirement Plan Services, Lincoln Financial Group. “The majority of people we surveyed said they did not think they were saving as much as they needed to in order to be on track.”
A full two-thirds of retirement plan participants understand that they should be saving at least 10 percent of their salary to stay on track, and 45 percent believe they need to save 15 percent or more – which aligns with general industry recommendations. However, only 4 in 10 savers are saving as much as they think is necessary, and among the savers who are saving less than what they think they need, the majority (68 percent) would need to increase their savings by 5 percent or more to be on track.
“Our message about the importance of saving is getting through to people. They clearly understand what they need to do,” said Ohl. “Now they must go a little further by taking the actions needed to overcome the competing financial priorities that keep them from meeting their financial savings goals.”
The more competing priorities a participant reports, the less money they contribute to their retirement plan. Only 36 percent of individuals with eight or more competing priorities are contributing 10 percent or more to their retirement plan, but of those who have two or fewer priorities fighting for a share of their wallets, 59 percent are contributing at least 10 percent and 40 percent are putting 15 percent or more away for retirement.
Student loan debt has a major impact on retirement savings, no matter how many other competing financial priorities a participant reported. Six out of ten people with student loan debt said it is keeping them from saving more for their retirement.
Most savers ‘responsible for their own retirement’
“Savers today face many financial pressures and the reality is that the majority of them are going to be responsible for their own retirement,” said Ohl. “As an industry, we have helped people understand the importance of saving. Now, it’s up to us to help them save more so they can achieve the retirement they envision.”
About the Lincoln Retirement Power® Participant Study
The 2017 Lincoln Retirement Power® Participant Study is based on a national survey of 2,509 full-time workers ages 21 to 70 who have been contributing to their current employer’s defined contribution retirement plan for at least one year — with data weighted by demographics to mirror the total population. Established in 2010, Retirement Power is a platform for research and viewpoints on central issues related to retirement planning. The program seeks to identify forward-thinking ways to help plan sponsors, advisors, intermediaries and participants. As part of the program, Lincoln sponsors both proprietary and third party research with an emphasis on what drives better retirement outcomes.
About Retirement Plan Services
For more than 60 years, Lincoln Financial Group’s Retirement Plan Services (RPS) business has been helping savers boost their retirement readiness through employer-sponsored plans. Our distribution force of more than 400 professionals, including institutional and wholesale distribution channels and advisor-based sales teams, work to provide plan sponsors with retirement plans that not only meet the unique needs of their plan participants but also align with sponsors’ total rewards strategies and help recruit and retain top talent. RPS Retirement Consultants, available onsite, online and by phone, develop long-term one-on-one relationships with savers to help motivate them to take actions that lead to better retirement outcomes. RPS offers personalized services, solutions and education to help plan participants get to and through retirement. The business serves approximately 1.4 million participants through 21,000 plan sponsors with $61 billion in assets under management as of March 31, 2017.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help empower people to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $236 billion in assets under management as of March 31, 2017. Learn more at: www.lfg.com. Find us on Facebook, Twitter, LinkedIn and YouTube.