(VigourTimes) - A recent study by BlackRock reveals a significant increase in pessimism among US retirement plan participants regarding their ability to save for their future. The study highlights concerns over high inflation and volatile markets causing economic anxiety.
The survey conducted by the $9.4tn money manager shows that the percentage of retirement savers who feel “off track” has more than doubled since 2021, reaching 24%. Furthermore, the percentage of savers who believe they are “on track” has dropped by 13 points from its peak in 2021, declining to 56% – the lowest level recorded in the survey’s eight-year history.
The uncertain economic conditions have led nearly 30% of all retirement savers to consider working for a longer period. The combination of higher interest rates and the disappointing performance of equity and bond markets in the previous year has left savers unsure about where to allocate their funds.
This shift in sentiment is particularly notable among younger workers, with 31% of them expressing concerns about being off track. This raises worries that they may lose confidence in long-term retirement savings plans like 401(k) and reduce their contributions.
Anne Ackerly, head of retirement at BlackRock, comments on the findings: “Gen Z has experienced the biggest drop in confidence. They haven’t encountered these circumstances before. Almost three-quarters of them admit they do not know how to make investment decisions and are seeking guidance from their employers.”
These findings align with other observations of the public mood. According to an annual survey by Edelman, a communications group, only 40% of respondents globally anticipate their family’s improved financial situation in five years, marking a 10-point decline compared to the previous year. In the United States, this figure is even lower, at 36%.
Interestingly, the same Edelman survey demonstrates higher levels of trust in employers than in governments and the media. While 78% of participants trust their employer, only 50% trust their government and the media.
The BlackRock study also reveals an increased interest in retirement products that protect defined contribution plan participants from market volatility. Out of the employees surveyed, 90% express interest in allocating at least a portion of their savings to a product that offers a guaranteed income, a significant rise from 76% two years ago. Currently, twelve major plan sponsors, managing $24bn in assets and serving 500,000 participants, are experimenting with making such a product their default option.
By John Hernandez
