When Awareness Doesn’t Translate into Action
However, while people know what they will need in the future, achieving expected income levels in retirement at current savings rates may present challenges, as the majority of respondents say they are saving less than 10% of their income.
For those who are saving on a pure DC basis, net state pension, Social Security, or other income sources, the potential for outliving retirement savings given a less than 10% savings rate is high. In the current market environment, a participant who saves 10% of their salary from age 25 to 65 could expect to receive a replacement rate of about 30% of their salary at retirement.1 This should give individuals and providers around the globe pause to consider course corrections.
People are living longer than ever, and the rising generation seems to understand the need to adopt new behaviors in order to enjoy a comfortable retirement. Such changes include a new approach to working — working longer and differently in order to builder greater financial security. Trends reflected in the annual Willis Towers Watson Global Workforce Study suggest that younger workers are increasingly focused on cultivating professional experiences defined by meaning and strong relationships,2 dimensions that can arguably sustain employees throughout a longer, more engaged working life. When seen together, these positive signs point to a public adjustment to the new demographic reality of longer life spans.
While saving earlier and working longer are ways to prepare for an adequately funded retirement, managing those funds to last a lifetime remains a critical issue for both workers and retirees. The majority of workers worldwide agree, saying they would value an employer-offered, predictable income solution in retirement.
Younger workers are the most interested, likely because they currently save through an employer plan and have come to connect retirement savings to the workplace.