Employees have more confidence in their work-sponsored investments than two years ago.

American workers have too much faith in the stock market, according to their bosses.

Those bosses feel that 54 percent of workers with employee-sponsored stock investments haven’t saved enough to retire on time, says a study from investment firm BlackRock.

“Strong market performance has helped fuel increasing optimism among American workers about their retirement prospects,” the study says. “But many employers don’t share their upbeat view.”

Why the disagreement?

BlackRock polled 1,000 employees with work-sponsored investments, along with 200 bosses, who sponsor them. Sixty-one percent of workers say they’re going to retire as they planned with the lifestyle they want. Nearly all (90 percent) say they’re confident in their overall financial situation.

Almost half (49 percent) say their retirement investments are the reason they’re so confident, which is up 20 percent from two years ago, according to the study. However, the rate that their bosses believe they need to delay retirement is also up 20 percent.

Despite the confidence these workers feel, most are unsure of how they’ll afford their spending needs in retirement. Seventy percent feel that they won’t have the same amount of retirement income as previous generations.

Fifty-one percent don’t know how to take what they’ve saved, and turn it into their monthly income in retirement. Another 48 percent worry they won’t be able to produce their own income, once retired.

“Historically, most retirees simply haven’t spent down their savings as quickly as anticipated,” the study says.  “On average, most retirees across all wealth levels have retained about 80 percent of their pre-retirement assets — or have even grown their assets — after almost two decades in retirement.”

Which is also something the investment firm doesn’t believe those retiring in the future will be able to do. Leaving most workers to want help from their bosses transitioning their retirement savings to income. And most bosses agree they should, according to the study.

Over a third (35 percent) have started offering retirement income investment options. Which, a lot of American workers would appreciate.

Stock investments are still important

Debt.com has previously reported that Americans want retirement income to last a lifetime. The only problem is, most companies don’t offer that kind of retirement benefit.

Given the choice to pick between $500,000 today or $2,700 a month for life, 62 percent of Americans would pick the latter, says a study from financial firm TIAA.

Fifty-six percent who aren’t retired say a guaranteed monthly income is the most important goal for a retirement plan. Only 32 percent of companies offered that in 2017. That means companies have increased that offer by 3 percent, according to BlackRock. It’s not confirmed if the investment options are guaranteed for life, but it is an improvement.

“A steady stream of income in retirement helps cover your expenses, no matter how long your retirement lasts,” says Ron Pressman, CEO of Institutional Financial Services at TIAA. “Lifetime income helps ensure Americans have the financial security they need in their retired years — it’s not a ‘nice-to-have,’ it’s an absolute necessity.”

Most Americans (65 percent) viewed the stock market as the best option to grow their retirement savings in 2017, according to a study from Wells Fargo. The amount of Americans confident in having enough saved for retirement increased 10 percent from 2016-2017. But, as employers in BlackRock’s study pointed out – that shouldn’t be all U.S. workers rely on for retirement.

For now, most Americans (71 percent) support legislation to allow work-place retirement plans to include  lifetime income benefits.

“The prospect of saving enough money to last through a potentially long retirement can be overwhelming, even for those who feel financially secure in their pre-retirement life,” Pressman says. “Ensuring all Americans have access to better retirement plans will go a long way in helping to bring the peace of mind we all deserve in retirement.”

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Meet the Author

Joe Pye

Joe Pye

Associate editor

Pye is the associate editor of Debt.com.

Retirement

income, money management

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Article last modified on July 10, 2018 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Can We Retire Off of Our Stock Investments? - AMP.