A new study by the LIMRA Secure Retirement Institute (SRI) reveals that 9 in 10 U.S. workers find retirement income projections somewhat or very helpful. The study also uncovered workers’ concerns about the validity of and calculations behind the projections.
“Providing an estimate of what their monthly income will be in retirement has been well received by most U.S. workers,” said Alison Salka, corporate vice president and research director for the LIMRA Secure Retirement Institute. “The study suggests that workers are interested in a clear explanation of how the estimates were calculated and need additional information to provide context to the projections.”
Forty-five percent of workers who found the retirement income estimates less than “very helpful” said they did not understand the calculations behind the projections or were not confident in the accuracy of the results. Two in five said the information was too hypothetical, and 17 percent said the projections didn’t capture all of their retirement savings.
“Many consumers do not have a good idea what their currently monthly income or expenses are — a prior SRI study found that nearly a quarter felt they needed help with basic budgeting skills,” noted Salka. “This coupled with unknowns like inflation and taxes can make any retirement projections seem abstract.”
Based on the survey, only half of U.S. workers have seen a monthly retirement income projection. Women and workers with incomes under $75,000 were less likely to have seen an estimate of their monthly income in retirement than men or workers making $75,000 or more. Workers contributing to a defined contribution plan are nearly twice as likely as those who are not contributing to have seen a retirement income projection (67 percent vs. 35 percent).
The findings are based on a nationally-representative survey of 2,024 Americans. The survey was fielded in October 2013.