The Employee Benefit Research Institute has been running their annual Retirement Confidence Survey for 25 years and there is always a huge pocket of current workers who are relatively uncomfortable with their overall retirement prospects. The one bit of good news to come out of all of this is that after the financial and real estate crises in 2008 and 2009, there was a big drop in the percentage of people who were fairly confident that they were going to have adequate resources, according to Jack VanDerhei, EBRI Research Director. He says there was a good amount of "false optimism" prior to 2008 and since then, it got a lot of people to see if what they were doing was going to adequate or not.
What VanDerhei hasn't seen as a result of this survey is any sign of secondary reaction, however, by increasing their overall savings rate. It's hard to point any fingers at employers who no longer offer defined benefit plans to their employees because they are, to a certain extent, very much a part of this overall situation. That shifts the responsibility over to the employees and if they can take advantage of what's available, VanDerhei thinks they can be just as well off as those who have defined benefit plans.
The biggest improvement Vanderhei has seen over the past several years has been with the passage of the Pension Protection Act in 2006 and he has found that those employees who are automatically enrolled in plans, stay in the plans. They are also on a much more promising path than they would have under the old traditional voluntary enrollment plan.
With the prospect of being able to take some of the plan assets and put them into something like a deferred annuity, so there's no need to worry about longevity risk, VanDerhei finds that to be a very promising situation. For those employees whose employers don't offer a defined benefit plan, all of the simulation models point towards a fair amount of negative retirement outcomes for them, VanDerhei notes.
For more detailed information on 2014's RCS, click here. Jack VanDerhei is the Research Director at EBRI and spoke with Retirement News Today, providing online retirement news video content. Retirement News Today is a featured network of Sequence Media Group.