National Attitudes on Retirement Security, Part 2

In this story:

• In a recently published study, a majority of Americans agree on how to combat retirement insecurity
• Responses indicate retirees need to know more about managing investments to last through retirement
• A majority of those surveyed said access to a defined benefit program brings security that can’t be found in 401(k)-style plans alone
• In particular, DB plans help offset market risk and the risk of outliving savings

“What do Americans think about retirement security?”

This was the central question to a study conducted by the National Institute on Retirement Security. The study took place in 2020 and involved participants from across the country.

Part 1 of this story covered the issues that survey participants raised:

• 67% of respondents said the U.S. faces a retirement crisis
• 56% are concerned they won’t become financially secure, and 58% said it’s getting harder as time goes on
• 68% said they aren’t able to save enough to guarantee a secure retirement

In addition to highlighting concerns, the study also shed light on ideas and solutions.

Better Access to Information

More than 70% of those surveyed agreed: “the average retiree does not know enough about managing investments to be able to make their retirement savings last.”

This insight could mean that retirees need or want more opportunities to enhance their financial literacy.

Some organizations, including PERA, offer educational opportunities to members and customers in the form of workshops, webinars, and online tools. But not all do.

Furthermore, 55 million Americans do not even have access to the retirement savings plans that often come with these educational opportunities.

Limit Uncertainty in Retirement

Even the best access to sound financial information can’t eliminate certain risks:

• Outliving your life expectancy – and your savings
• Experiencing underperforming market returns, particularly at the beginning of retirement  
• Reduced ability to manage money as you age

In the face of these uncertainties, survey participants said that defined benefit plans are a good solution for retirement planning compared to relying completely on self-directed investing plans:

• 54% said they would trade savings for guaranteed income.
• 65% agreed that “pensions do more to help workers achieve a secure retirement as compared to retirement savings plans such as 401(k)s.”
• 75% said: “all workers should have access to a pension plan so they can be independent and self-reliant in retirement.”

Final Thoughts

Retirement looks different for everyone. But obtaining a sense of security is a goal that nearly all retirees share.

Different financial tools work together to contribute to increased security:

• Access to quality financial education can lead to more informed decision-making and planning
• Access to self-directed retirement plans, including the 401(k) and 457 options PERA members have with PERAPlus, give flexibility about contributions, investments, and withdrawals
• Access to a defined benefit plan like PERA members have leads to a stream of lifetime income, which helps offset many of the risks retirees face

Voicing support for policies that promote financial security helps ensure that retirees are able to spend their retirement years — whatever that looks like for them — in confidence.

Defined benefitAlso known as a pension, this is a type of pooled retirement plan in which the plan promises to pay a lifetime benefit to the employee at retirement. The plan manages investments on behalf of members, and the retirement benefit is based on factors such as age at retirement, years of employment and salary history.