Those who weren't heeding the warnings about a coming retirement crisis before the Great Recession hit probably are now.
With a chunk of the 77 million Baby Boomers delaying retirement because of declines in their retirement accounts or simply not saving enough, the threat of what a crisis like this could do to our economy, and the direct impact it would have on companies, is more evident than ever.
That said, it doesn't start and end with the Boomers. At the start of 2010, the average participant's 401(k) balance was just under $110,000. This is shockingly low when you consider that most people won't be receiving a pension benefit, and that Social Security and Medicare are on financially shaky ground. Our latest research found only 15 percent of employees in the work force today are confident they are on track to retire. This was a drop from last year (down from 17 percent) even though employees showed strong improvements in other areas of financial management.
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Despite their lack of confidence, employees appear to be making the right moves to plan for retirement. Ninety-one percent of employees said they participate in their 401(k) at work. But if so many employees understand the importance of saving for retirement, why is it that so little are sure they can retire?
The fact is most employees don't know how to apply retirement planning concepts to their own lives. Only 34 percent of employees said they were confident their investments were allocated properly, and 66 percent admit to never even having used a retirement planning calculator.
Employees delaying retirement and not having the knowledge they need to plan for their futures creates a host of risks that could end up costing plan sponsors. With the threat of a major crisis ahead, the risks are magnified. Next month, I'll be providing some specific risks to be aware of along with some best practices for how to avoid and manage them.
Educating employees about their retirement benefits has proven to help them increase their retirement savings and manage their finances better. Helping them achieve their retirement goals is not only in a company's best interest, it is vital to making sure our entire country isn't affected by a devastating crisis.
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