How Americans feel about the process of saving for retirement has a
direct effect on their actions and success as savers.
That is one of the key findings of BlackRock's
annual Retirement Survey, released today, which revealed that the
most successful retirement savers have certain psychological and
emotional attitudes related to the actual process of saving that drive
them to put more money away for retirement, compared to savers who don’t
share similar attitudes.
The survey also shows that defined contribution (DC) workplace
retirement plans have a considerable role to play in building
fundamental savings insight that encourages individuals to save more.
The BlackRock poll surveyed 1,011 Americans nationwide saving for
retirement, with 882 participating in a variety of workplace retirement
plans, including 401(k)s.
“When workers feel empowered, confident and positive about the
retirement savings process, they will actually save more for retirement
than workers who don’t feel that way,” said Chip Castille, Managing
Director and head of BlackRock’s US & Canada Defined Contribution Group.
Believing It’s “Doable” Drives Savings
The belief that allocating money to retirement and current needs
simultaneously is actually “doable” leads directly to greater savings,
according to an analysis by BlackRock’s polling partner, Boston Research
Group (BRG).
Among poll respondents agreeing that “you can save for retirement and
meet daily expenses at the same time,” 46 percent were saving at the
highest level (11 percent or more of annual household income) – however,
among those disagreeing with the statement, just 17 percent were
matching that saving level.
“Simply put, the ‘secrets of highly effective savers’ are truly yielding
higher retirement savings,” Castille said.
Retirement Savings Levels Still Falling Short
Savings effectiveness is a crucial element of the overall retirement
planning exercise. “Generating a desired stream of secure retirement
income critically depends on a worker’s effectiveness as a saver
throughout their working years – the larger the pool of savings at
retirement, the greater the potential income,” Castille said.
Yet, American workers are still not saving as much as they should for
retirement, according to the BlackRock poll. It is generally recommended
that households save about 15 percent of annual pay for retirement.
However, about two-thirds of those polled by BlackRock saved just 10
percent or less of household pay in 2012; 28 percent saved only 5
percent or less.
Seven in 10 individuals saving for retirement say their focus on this
effort has increased over the past five years. Still, fewer than one in
four are confident about having enough money for retired life.
Notably, BRG’s analysis showed that empowerment, confidence and positive
attitudes about the retirement savings process are not merely
“associated” with a high level of retirement savings (defined as saving
11 percent or more of annual household income), but in fact have a
direct, “causal” impact on how much money individuals are saving.
Among the other “secrets of highly effective savers”:
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“Envisioning” Retirement and Seeing Progress
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“Savers who are having trouble ‘envisioning’ the retirement they
want to achieve are less successful as savers,” Castille said.
Among those agreeing that
“once I figure out what I want my retirement to look like, I will
start saving more,” just 28 percent were saving 11 percent
or more – but among those indicating that they have already
“figured out” their retirement picture, 39 percent were
classed as highly effective savers.
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“Being able to effectively chart one’s progress toward their
savings goal also offers invaluable support for saving,” Castille
said. Among those agreeing that
“When I look at my retirement savings, I see steady progress
toward my retirement savings goal,” 39 percent are saving
highly effectively – among those disagreeing
with that statement, just 20 percent are.
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Feeling Hopeful About Attaining a Good Retirement
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Believing that one’s income level doesn’t pre-ordain their ability
to secure a good retirement helps to spur saving. When respondents agreed
that “the only people I know who have a good retirement lifestyle
made significantly more money than I am making,” just 24 percent
were saving at a highly effective level – compared with 48
percent of those who disagreed
with that statement.
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Tapping Objective Guidance
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The belief that one is tapping good, trustworthy guidance for the
savings process makes a difference, too. Among those agreeing
that “I want to save and invest more but I just don't know whom I
can trust for unbiased advice,” just 30 percent were saving
highly effectively – but among those indicating that they have
someone they trust for unbiased advice, 40 percent were
highly effective savers.
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Feeling Confident About Securing Income
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Perhaps most significantly, to the degree that savers do not feel
confident about securing retirement income, they evidently feel
less motivated to save. Among those agreeing
that “I am nervous at the prospect of trying to live without
employment income,” just 30 percent were saving highly
effectively - but 46 percent of those disagreeing
with that statement ranked as highly effective savers.
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Tools Linking Retirement Savings and Income Encourage Savers
Though many Americans are clearly not currently saving enough for
retirement, the poll suggests retirement savings levels could be boosted
through planning tools, delivered via DC plans and other means, that
give workers greater insight into the connection between their saving
effectiveness and their ability to generate retirement income.
More than nine in 10 individuals participating in workplace retirement
plans said they would be encouraged to save more for retirement (about
four in 10 would be encouraged “a great deal”) if their plan told them
how much income their current savings would fund in retirement and how
much they needed to save to reach their retirement income goal.
To help provide this insight to retirement savers, BlackRock in July
introduced its CoRI
Retirement Index series, designed to
enable investors and advisors to reliably translate savings into
estimated lifetime income as well as develop savings strategies that can
better secure desired retirement income (more information is available
at www.blackrock.com/cori).
“Our poll makes clear that saving for retirement can be a
self-reinforcing process: When individuals have strongly positive
feelings about the effectiveness of their planning and saving, they will
save even more,” Castille said. “The key is to make sure retirement
savers have the insight, guidance and tools they need to put the right
strategies in place.
“BlackRock is dedicated to empowering individuals saving for retirement
by providing practical support for their efforts – support that we
believe can translate directly into greater savings success and more
financially secure retirements.”
About BlackRock
BlackRock is a leader in investment management, risk management and
advisory services for institutional and retail clients worldwide. At
September 30, 2013, BlackRock’s AUM was $4.096 trillion. BlackRock helps
clients meet their goals and overcome challenges with a range of
products that include separate accounts, mutual funds, iShares®
(exchange-traded funds), and other pooled investment vehicles. BlackRock
also offers risk management, advisory and enterprise investment system
services to a broad base of institutional investors through BlackRock
Solutions®. Headquartered in New York City, as of September 30, 2013,
the firm had approximately 11,200 employees in 30 countries and a major
presence in key global markets, including North and South America,
Europe, Asia, Australia and the Middle East and Africa. For additional
information, please visit the Company's website at www.blackrock.com.
About the BlackRock Retirement Survey
Of the 1,011 Americans saving for retirement polled, 882 participate in
a variety of DC plans, including 401(k) plans, 403(b) plans, profit
sharing and stock purchase plans. Participants were drawn randomly
across all sized plans and from all sized employers with a maximum
sampling error of +/– 3.1 percentage points at a 95% confidence level.
Copyright Business Wire 2013