More retirement saving is needed for Americans to effectively prepare for their futures, according to researchers.
The Center for Retirement Research at Boston College notes that only 42 percent of private sector workers have any sort of retirement plan as part of their employee benefits package. This leaves more than one-third of households dependent on Social Security and any savings they have managed to amass, which are likely to prove insufficient for their needs. As a result, they most likely means will not have enough retirement income, leading to financial hardships and potentially increasing the drain on various government programs.
The mobility of the workforce also tends to limit 401(k) accumulations, as well. Past attempts to deal with these issues through methods such as simplifying pension plans, have proven insufficient. Researchers have concluded that any additional retirement income tier established by the government should not exclusively target those who lack access to a retirement plan. Doing so could exclude many who need help, even if they are in a stronger position than Americans without any plan.
Educational efforts should not be oversimplified
Employers may be able to help in a number of ways, such as by educating employees so they can engage in better retirement planning. Efforts to reach out to employees may be limited by oversimplifying the nature of retirement planning at times, expert Sherrie Grabot recently indicated at Reframing Retirement, the Plan Sponsor Council of America’s (PSCA) 65th annual conference. General rules, such as the one that states 4 percent spending is typically sufficient during retirement, cannot be taken too literally. Adhering too rigidly to recommended saving strategies could mean failing to account for variable economic and personal circumstances.
Changes in inflation, interest rates and other factors must be taken into account. While it is best to present the basics to plan participants and to do so in clear, straightforward language, ignoring the potential for changing circumstances may be to their detriment.
