Study at a glance
Participant research
Connecting savings with income
Transcript
Connecting savings with income
Invesco’s 2022 retirement income study reflects on the pressing need to help participants turn their defined contribution 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 – through online surveys, in-depth interviews, and virtual focus groups.
We examined how participants 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 participants’ lifelong savings with income in retirement.
By offering retirement income benefits – and encouraging participants 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 participants stay in the plan when they retired.
However, more work needs to be done. While half of plan sponsors say they actively encouraged participants to stay in the plan, only 28% of participants 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 participants 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 participants would view their employer favorably if they added specific retirement income solutions to the plan.
With 83% of participants expecting their DC plans to be their largest source of income in retirement, plan sponsors have a significant opportunity to help participants 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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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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DCRIR-VID-2-E 12/22 NA2619475 2022 Invesco Ltd. All rights reserved.
Our 2022 retirement income study focused on plan sponsor and participant 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 participants (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 participants staying in plan. In fact, almost eight in 10 preferred participants keep their assets in the plan at retirement, with half (50%) saying they have taken steps to encourage it.
At the same time, many participants 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 participants 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 participants felt that their plan did not offer enough investment choice or flexibility to accommodate their unique needs in retirement. However, our research shows participants are open to staying in the plan at retirement under the right circumstances.
Plan sponsors have a significant opportunity to help participants 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 participants 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 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.
