Retirement planning advice is not one-size-fits-all. And it’s no secret that workers have struggled to go it alone since the advent of the 401(k) some 40 years ago. Perhaps that’s why so many people around the world, especially in the United States, want more help in the form of retirement planning advice.
This was one of the key findings from The Future of Global Retirement Report 2021 by Smart, a retirement technology provider (download required). The company surveyed 6,772 adults in the UK, U.S. and Australia about their attitudes, concerns, and preferences regarding their retirement finances.
According to the report, cited in a recent BenefitsPro article, retirement planning in the U.S. is in a state of flux. Currently, half of Americans don’t have access to an employer-sponsored retirement plan. That may change now that the SECURE Act, passed in 2019, is in place. Among other provisions, SECURE makes it easier for small employers to joined pooled employer plans (PEPs), making retirement savings more accessible to greater numbers of Americans. In addition, SECURE Act 2.0 just went to Congress for consideration, and is likely to augment retirement planning and savings opportunities set forth in the original SECURE Act.
In addition, the report found that 54% of Americans are aware of their retirement options – including 75% over age 55. While this demonstrates a greater understanding than the other regions included in the study, 25% of respondents said they don’t know where to go for retirement planning advice. Moreover, 40% say they have never received any retirement planning advice.
Most Americans ranked financial advisors as their number one source of financial advice, however, 34% of respondents said they would seek the advice of a retirement savings provider. Even so, only 9% said they valued their provider as their most useful source of information. Clearly, that demonstrates a disconnect between the advice retirement plan providers are delivering and what savers want, according to the report.
Defined contribution plans are newer in the UK, and retirement contributions are compulsory in Australia. However, in both countries, there is a clear need for more advice and direction for workers when it comes to retirement planning.
According to Smart, which published the report, employers have three distinct opportunities to help improve retirement planning:
- Encourage savers to seek advice sooner than later, and consider using technology to make advice more accessible.
- Deliver advice for retirement as a stage of life, not a singular event. Nearly half of the people Smart surveyed view retirement as a process, and one-third plan to continue working in retirement.
- Offer savers more control and flexibility over their retirement planning. Almost three-quarters of those surveyed said they want at least some involvement in managing their finances for retirement, with half saying that accessing their retirement account online is crucial.
It appears that most workers are looking for additional retirement planning advice.
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