PLANADVISER - September/October 2018 - 21

Plan Sponsors Could Do More
Few address how to help their employees have income for life
NOT QUITE half of nonprofit, and
corporate, for-profit, employers are at
least somewhat confident about their
employees' retirement future, and one
in five say they are not at all confident,
according to the 2018 TIAA Plan
Sponsor Retirement Survey.
As for their biggest concerns, nearly
all respondents cited rising health care
costs (91%), followed by their retirees
outliving their savings (77%). Yet, TIAA
says, surprisingly few have built retirement
plan offerings that solve for these
challenges. Employers also worry that
many of their employees save too little
(75%) or are neglecting to participate in
a retirement plan (55%).
For employees to have access to
retirement investments that guarantee
income for life is something both
employers and employees say they
want. According to the survey, more
than half (51%) of all employers think
their workers would prefer to receive
$2,700 a month for life rather than
a $500,000 lump sum at retirement.
This echoes an earlier TIAA study in
which 62% of employees said they
would make that choice. Nonprofits are
twice as likely as corporate, for-profit
firms (56% vs. 25%) to believe their
employees would choose monthly lifetime
income over a lump sum.
While employees voice a strong
interest in lifetime income options,
few have access to one through their
employer
retirement
savings
plan.
Only 12% of employers offer annuities
as retirement income options for
retirement savings;
instead, the most
common options are target-date funds
(TDFs) (31%), mutual funds (30%) and
stable value funds (20%), all of which,
TIAA notes, rely on spending down
assets, and none of which create a
guaranteed income stream.
Fifty-seven percent of employers
expect employees to generate retirement
income through systematic and
lump-sum withdrawals-distribution
options that are not guaranteed.
Twenty-seven percent say they do
not know how their employees will
generate
income. Only 14% expect
them to generate income from an
in-plan annuity. " Nonprofit plan sponsors
are more likely than corporate,
for-profit plan sponsors to advocate for
their employees to put their savings
into an investment that offers lifetime
income distributions once they retire
(32% vs. 23%), " the study says.
" Retirement
is a critical
financial
pillar in our country, " says Doug Chittenden,
president, institutional retirement
at TIAA. -Rebecca Moore
Half of
Retirement
Savers Are
'Chasers'
Expenses interfere with
many workers' retirement
saving goals
ALTHOUGH 90% of active retirement
savers agree that accumulating
an adequate nest egg is important
for their future, a significant subset
worries that they are too far behind
to reach this goal, a survey by Allianz
Life found. Among Americans between
the ages of 45 and 65 who are saving for
retirement, Allianz Life found that 49%
are " chasers, " who think they need to
catch up on their retirement savings.
Eighty-five percent of these chasers
think they have fallen behind in retirement
saving, and another 85% think it
is too late for them to have a comfortable
retirement. Ninety-eight percent
wish there was a way to make up for
lost time, but 63% say they cannot
take the chance of investing in higherrisk
financial products. Only 34% say
that the sole way to save enough for a
comfortable retirement is to invest in
risky financial products.
" Among those Americans actively
saving for retirement, our study finds
a dramatic difference between those
who feel on track and those who feel
behind, with this subset wishing for
ways to catch up but without taking
on too much risk, " says Paul Kelash,
vice president of consumer insights at
Allianz Life. " While it's a positive that
they are actively saving for retirement,
the level of anxiety is concerning, and
many are simply not aware of potential
solutions to help catch them up. "
Chasers have a mean portfolio
balance of more than $400,000. Fiftyfour
percent say that other expenses
interfere with their retirement saving,
and 20% say they are saving for other
financial goals. Sixty-six percent of
chasers worry they will run out of
money in retirement, and 61% think
they will need to keep working.
Just 53% of chasers have an individual
retirement account (IRA), and
35% own stocks. Thirty-five percent
own mutual funds, 53% have a
pension, and 28% own an annuity.
Eighty-four percent would be interested
in a financial product that offers
growth
potential
plus
protection
against loss, and 71% would be willing
to give up some upside growth potential
to gain protection from losses.
-Lee Barney
planadviser.com September-October 2018 | 21
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PLANADVISER - September/October 2018

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