Eighty percent of defined contribution participants believe a guaranteed monthly payout benefit is a ‘must have,’ according to a study released today by State Street Global Advisors.
The survey, Young at Heart: What DC participants are thinking about retirement income, highlights the needs, behaviors and concerns of plan participants regarding their retirement income.
Sixty-nine percent believe that some sort of guaranteed monthly income stream will be necessary in addition to Social Security and 64 percent of respondents intend to take monthly withdrawals from their plans to cover expenses. Just 6 percent prefer a lump sum payout from their plans.
While a majority of plan participants are satisfied with the quality of support they receive from their plan, according to SSgA, there remains an opportunity for plan sponsors to help participants establish guaranteed income during retirement.
“They need guidance on what do with the savings they have accumulated -- how to spend it and how to make it last,” said Fredrik Axsater, managing director and head of global defined contribution for SSgA.
Only 24 percent of respondents are confident that they’ve saved enough to retire comfortably. Nearly half (46 percent) aren’t planning on retiring until after age 66, with 15 percent expecting to hold out until after age 70.
“As workers shift from saving for retirement to spending in retirement, they are evaluating their investment choices and looking to plan sponsors to help them make that transition,” said Axsater. “Plan sponsors should seize this opportunity to begin a dialogue with participants about how to achieve retirement security.”
SSgA’s Defined Contribution Investor Survey, conducted jointly with TRC Market Research, surveyed nearly 1,500 employees, aged 40 to 70, who participate in 401(k), 403(b), 457 and profit sharing plans.