Study at a glance
Plan member research
Connecting savings with income
Transcript
Invesco’s 2022 retirement income study reflects on the pressing need to help plan members turn their defined contribution plan savings, into long-term retirement income.
Together with Greenwald Research, we connected with 118 US plan sponsors and consultants, and over 1,000 US DC plan members – all working for large employers – through online surveys, in-depth interviews, and virtual focus groups.
We examined how plan members think about retirement income in general, and the types of in-plan solutions and resources most attractive among different employee demographics.
Our first key insight takes a closer look at how plan sponsors can better connect members’ lifelong savings with income in retirement.
By offering retirement income benefits – and encouraging members to stay in the plan when they retire – plan sponsors can help ease the transition into retirement.
In fact, 77% of plan sponsors in our survey preferred plan members stay in the plan when they retired.
However, more work needs to be done. While half of plan sponsors say they actively encouraged members to stay in the plan, only 28% of employees were unsure if it was even allowed, including three in 10 Gen X and baby boomers.
If specific investments were available to help them create a regular stream of retirement income, nine in 10 plan members would stay in their DC plan when they retired.
Understandably, plan sponsors have been cautious and slow to adopt retirement income solutions.
51% wanted more guidance on current regulations, and 65% needed more information on retirement income solutions currently available.
Yet almost all plan members would view their employer favorably if they added specific retirement income solutions to the plan.
With 83% of members expecting their DC plans to be their largest source of income in retirement, plan sponsors have a significant opportunity to help members of all ages along their planning journey.
To learn more about the findings from our 2022 DC retirement income research study, visit our website, or contact your Invesco DC professional.
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Invesco.ca/retirementincome Published 12/30/22 NA2624207 2022 Invesco Canada Ltd. All rights reserved.
Our 2022 retirement income study focused on plan sponsor and member preferences for turning defined contribution (DC) savings into retirement income. We teamed with leading research firm Greenwald Research on an extensive study involving connecting with more than 100 plan sponsors and consultants and 1,100 members (all working for large US organizations with at least 5,000 employees) through online surveys, in-depth interviews, and virtual focus groups.
Plan sponsors’ thinking has evolved with most recognizing the importance and value of members staying in plan. In fact, almost eight in 10 preferred members keep their assets in the plan at retirement, with half (50%) saying they have taken steps to encourage it.
At the same time, many members recognized the benefits of leaving money in their current DC plan when they retire – including the familiarity of their employer’s plan and the convenience of staying put – but most planned to roll their money out of their plan into other accounts. Why?
Plan features that have helped members save for retirement over the years may not quite fit the needs of near-term and current retirees today as they start to spend down their savings. Echoing that notion is the fact that many members felt that their plan did not offer enough investment choice or flexibility to accommodate their unique needs in retirement. However, our research shows members are open to staying in the plan at retirement under the right circumstances.
Plan sponsors have a significant opportunity to help members connect savings to retirement income. They can include income solutions to the plan in stages, such as first determining the plan’s goals and objectives to help members create income in retirement. Also, sponsors can highlight to employees their ability to create an income stream through various investments and flexible distribution options the plan has specifically selected for their retirement income needs.
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Our latest defined contribution research reflects upon the evolving retirement industry today as it faces the pressing need to help plan members turn their DC plan savings into long-term retirement income. We connected with over 100 plan sponsors and 1,000 members to better understand their preferences for creating retirement income and what features, resources, and approaches to communications resonated across the generations.
