Confidence in retirement security drops dramatically across demographics

More than one-third of Americans — 37% — feel unprepared or unsure if they are on the right track for retirement. It’s the first time in several years that data from The 2022 BlackRock Read on Retirement survey indicates a notable decline in confidence among savers participating in a workplace retirement plan, down from a peak of 68% in 2021. Among savers who did not have access to a workplace retirement plan, only 51% feel they are on track for retirement.

The BlackRock Read on Retirement, formerly known as the BlackRock DC Pulse Survey, provides insights from a research study of more than 300 large defined contribution plan sponsors, 1,300 workplace retirement plan savers, 1,300 independent savers, and 300 retired workplace savers in the United States.

Inflation is a key driver for the decline in confidence, according to BlackRock officials, and almost 90% of workplace savers report they are concerned about inflation impacting their retirement. These savers also report a decrease in spending on big ticket items (54%) and consumables (42%) as a result. A majority of survey respondents, about 64% also are worried about their nest egg lasting throughout their lifetime — a data point that is even higher among Black/African American (75%), Asian/Pacific Islander (71%) and Hispanic/Latino (67%) respondents. Additionally, 90% of all employers and savers are interested in investment options that would provide guaranteed income in retirement.

The good news is that, of all Americans currently in the workforce — the most in modern history, by the way — the youngest workplace savers (Gen Z) are demonstrating the strongest retirement savings discipline. BlackRock researchers found that group is setting aside an average of 14% of each paycheck, compared to 12% for other generations (Millennials, Gen X, and boomers). However, one-third of Gen Z respondents believe they can retire comfortably with less than $250,000, compared to half of Baby Boomers who reported they would need $1 million to $3 million to retire.

Related: Are early retirees overspending in retirement?

“As we experience new market headwinds that could impact the retirement security of millions of Americans, it’s a critical time for our industry to ensure people are planning for retirement with confidence and clarity,” Anne Ackerley, head of retirement at BlackRock, says in a statement. “While it’s encouraging to see double-digit savings rates across every generation, we have work to do to help more Americans reach retirement with dignity and on their own terms — particularly those without access to employer savings plans, and women and people of color.”

Other key findings:

• Retirement confidence varies across generations, with a high percentage of Millennials (19%) and Gen X (22%) reporting they are not on track for retirement compared to Boomers (12%).

• Interest in retirement income is higher than ever, with 87% of workplace savers willing to invest a portion of their retirement savings in exchange for guaranteed regular income payments (up from 71% last year.) Similarly, 74% of employers say that retirement income has become more important for their employees, and 90% agree that plan participants would benefit from a target date fund (TDF) that generates guaranteed retirement income.

• Savers without access to a workplace retirement plan are most at risk of being unprepared for retirement, with 46% reporting they are holding at least some of their savings just in cash, missing out on wealth-generating opportunities. This group also reported low familiarity with common retirement vehicles such as target date funds, or TDFs (41%).

• Women and diverse communities show differing levels of retirement confidence. Only 53% of women said they feel on track with their retirement savings, compared to 63% of all workplace savers, and 73% of men. Among diverse groups, 65% of Blacks, 57% of Hispanic/Latino respondents, and 51% of Asian/Pacific Islander respondents saying they are on track for retirement.