1,049 Plan participants
Took part in a U.S. online survey, including 12 focus groups (all working for large employers with 5,000+ employees)
100 Plan sponsors
Working with large corporate and public plans took part in a national survey
18 In-depth interviews
With large plan sponsors and consultants
Executive summary
Our 2022 retirement income study concentrated on how plan participants think about retirement income in general, what type of in-plan solutions may be most attractive to them (and why), which resources would best resonate across a wide range of plan demographics, and how best to bridge the (savings to income) gap moving forward by examining how participant and plan sponsor mindsets differed at times.
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3 min highlight video
View highlights from the research along with some of our key findings.
Transcript: 2022 Show me the Income executive summary video
Our 2022 Retirement Income study reflects on the evolving retirement industry today as it faces the pressing need to help participants turn their DC plan savings into long-term retirement income.
Together with Greenwald Research, we connected with 118 plan sponsors and consultants and over 1,000 DC plan participants in the US (all working for large employers with more than 5,000 employees) through online surveys, in-depth interviews, and virtual focus groups.
Due to the global turmoil over the last few years, there’s been a shift in how employees define retirement, and how best they can prepare both mentally and financially. We found there’s an opportunity to provide participants retirement income-specific planning tools, investments, distribution options, and communications designed to help.
In our first finding, we learned that most plan sponsors recognized the importance of helping participants ease the transition from saving to income in retirement. First, by letting participants know they have the option to stay in the plan when they retire, and second, by offering retirement income solutions within the investment menu along with flexible distribution options.
While half of plan sponsors surveyed encouraged participants to stay in plan at retirement, more work needs to be done to generate awareness.
In our second finding, participants often had two intertwined fears First, outliving their retirement savings, and second, spending too much, too soon.
Only 22% were very confident they could create a retirement income strategy on their own. Which includes determining how much of their retirement savings to withdraw, when and from which financial source.
We also found that participants wanted a reliable income stream to cover their expenses with the flexibility to withdrawal funds as needed – without running out of money along the way. They didn’t know what type of retirement income solutions could achieve this.
Yet when asked, participants felt both guaranteed lifetime income solutions and non-guaranteed monthly income withdrawal solutions would be a good fit for them, in different ways
In our fourth finding, we uncovered that few participants would put all their DC plan savings into just one retirement income solution. 90% of participants preferred two to three choices that included a guaranteed and non-guaranteed option.
Regardless of how many in-plan solutions were offered, eight in 10 participants wanted help choosing which solution would best fit their personal situation.
Finally, we found that three quarters of participants were eager for their employers to start the retirement income conversation earlier
While 78% of plan sponsors reported they provided specific retirement income generation communications, only 38% of participants reported they received those communications.
As participants rely on their DC plan as their largest income source in retirement, plan sponsors have a significant opportunity to help participants of all ages along their planning journey.
Request our white paper to view a complete checklist with detailed action steps for plan sponsors.
To learn more about the findings of our 2022 DC retirement income research study, visit our website or contact your Invesco DC professional.
FOR DEFINED CONTRIBUTION PLAN SPONSOR USE ONLY
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Cited Invesco research is based on Invesco’s work with Greenwald Research. Invesco is not affiliated with Greenwald Research. Participant quotes are used with permission.
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Key Insights from the research
In our retirement income study, we found that participants wanted both guaranteed and non-guaranteed retirement income solutions, flexible withdrawal options, and early communication about retirement.
Most plan sponsors recognized the importance of tightening the connection between a participant’s DC plan savings and their retirement income. Sponsors could encourage participants to stay in the plan at retirement by offering specific investments to help them create a regular stream of retirement income.
Source: Invesco participant survey, October 2021.
Participants were fearful they would run out of money in retirement and lacked confidence in their ability to create a retirement income strategy. To help, plan sponsors could implement auto-enrollment into a retirement income solution as a strategy to create consistent income.
Source: Invesco participant survey, October 2021.
Participants wanted a consistent, monthly income stream to reliably cover their baseline expenses with the flexibility to withdraw additional amounts to cover ad-hoc spending. Participants saw the potential advantages of monthly income withdrawal solutions (non-guaranteed) and guaranteed lifetime income solutions to achieve their retirement goals.
Source: Invesco participant survey, October 2021.
Participants desired at least two in-plan options to help provide the reliability of steady income and the flexibility to make changes as needed. They wanted their employers to help them choose how to split their DC plan savings between a guaranteed lifetime income solution and a non-guaranteed monthly income withdrawal solution.
Source: Invesco participant survey, October 2021.
Most participants wanted their employers to start the retirement income conversation earlier (at hire or when they first join the plan) and continue it on a more frequent basis (annually at open enrollment). And nearly two-thirds of participants were interested in an online tool to help compare retirement income options available in their plans.
Source: Invesco participant survey, October 2021.
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Get the full white paper
Our latest defined contribution research reflects upon the evolving retirement industry today as it faces the pressing need to help participants turn their DC plan savings into long-term retirement income. We connected with over 100 plan sponsors and 1,000 participants to better understand their preferences for creating retirement income and what features, resources, and approaches to communications resonated across the generations.