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Scoring the progress of retirement savers

Sep 30, 2020
Empower Institute

Americans’ ability to replace their current income in retirement has improved

Empower’s 2020 national survey of retirement preparedness found continued improvement in the median American’s ability to replace their current income in retirement. Despite this progress, some groups of people remain better prepared for retirement than others. In this paper, we explore three significant factors that influence individuals’ retirement scores:

  • Savers’ personal characteristics
  • Retirement plan design features
  • Individual actions that support better retirement savings habits

The insights provided by our survey results offer guidance for plan sponsors as they seek to improve employees’ retirement preparedness. For example, plan sponsors might consider:

  • Tailoring communications to vulnerable populations
  • Including plan features that encourage participants to increase their savings
  • Offering financial advice to plan participants

Key findings:

  • The median American is on track to replace 69% of their current income in retirement. This number represents an increase from previous years.
  • Plan design elements such as automatic enrollment and automatic contribution increases can play a significant role in boosting retirement savings.
  • Habits such as saving 10% of income help employees stay on track for retirement. Plan design can help reinforce these habits.
  • The use of financial advice — from a digital or human advisor — can improve an employee’s ability to achieve the retirement lifestyle they want.
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Complements, not substitutes

Based on this analysis, participants do not consider managed accounts to be substitutes for target date funds.

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Carefully consider the investment option’s objectives, risks, fees and expenses. Contact Empower Retirement for a prospectus, summary prospectus for SEC-registered products or disclosure document for unregistered products, if available, containing this information. Read each carefully before investing.

Securities, when presented, are offered and/or distributed by GWFS Equities, Inc., Member FINRA/SIPC. GWFS is an affiliate of Empower Retirement, LLC; Great-West Funds, Inc.; and registered investment adviser, Advised Assets Group, LLC. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice.

IMPORTANT: The projections, or other information generated on the website by the investment analysis tool regarding the likelihood of various investment outcomes, are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. The results may vary with each use and over time.

Investing involves risk, including possible loss of principal.

Insurance products are issued by or offered through Great-West Life & Annuity Insurance Company, Corporate Headquarters: Greenwood Village, CO; or in New York, by Great-West Life & Annuity Insurance Company of New York, Home Office: New York, NY. Guarantees are subject to the terms and conditions of the contract and the claims-paying ability of the insurer.

The managed account service is part of the Empower Retirement Advisory Services suite of services offered by Advised Assets Group, LLC, a registered investment adviser.

The Empower Institute is a research group within Empower Retirement, LLC.

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