While nearly half of people saving for their retirement are failing to put away enough money to sustain them at their current lifestyles once they retire, data indicate that there's the potential for plan design to be enhanced so that it improves the situation.
That's according to MassMutual, which has collected two years' worth of data from its PlanALYTICS program, which the firm uses to measure the relative effectiveness of retirement plans and the retirement readiness of employees who participate in those plans.
According to the data, 45 percent of people aren't saving enough to be able to keep up their present lifestyle once they hit retirement. However, the firm said that if both retirement plan sponsors and employees make changes, many more retirees can be fully prepared financially for the day when they finally leave the workplace.
Recommended For You
To that end, sponsor participants in the PlanALYTICS program have access to a suite of tools and receive a detailed analysis of their retirement plan's overall health, which the company has dubbed the PlanSmart Analysis. In addition, sponsors will offered suggestions to bring about improvement. Plan participants also receive an analysis of their retirement readiness and, if they are off target, are provided with suggestions on how to become better prepared.
The analysis is based on a benchmark of replacing at least 75 percent of preretirement income at 67, the age most people qualify for full Social Security benefits. The analysis can be adjusted for participants born before 1960 who qualify for full Social Security benefits at an earlier age. The benchmark takes into account retirement savings, Social Security and income from pensions, if available.
The program indicated that the 54.4 percent of plan participants who are on target for retirement could be increased to 69.4 percent if employers incorporate plan design changes such as automatic enrollment and automatic deferral increases, and encourage savings by matching employee contributions. Other improvements the program may suggest include incorporating target date funds and implementing focused employee communications such as direct e-mail and mail campaigns, group seminars and one-on-one education.
According to MassMutual, workers whose employers participated in the program contributed more to their plans and thus saw larger increases in their retirement savings. Deferrals increased 17.1 percent for participants enrolled in PlanALYTICS compared to 1.1 percent for those not enrolled in the program. In addition, retirement savings increased 33.8 percent for those enrolled in the program compared to 15 percent for those not enrolled.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
