Retirement Perspectives Brighten, But One Regret Still Looms Large

While most expect their standard of living in retirement to be about the same, or a little better than it is now, one regret (still) looms large.

According to new research by American Century Investments, 40% worry about running out of money in retirement, and half that many (18%) are concerned about the loss of income—and the biggest life regret is… not saving more for retirement, cited by just over a third (35%) of respondents. That far outnumbered regrets about career, personal relationships, not doing enough to enjoy life, or “not being a better person overall.”

Those regrets notwithstanding, a plurality (39%) expressed a desire for a “slight nudge” to get them to save more, versus 27% that embraced a “strong nudge,” and the 1 in 10 that were willing to countenance a “kick in the pants.” However, just over 22% wanted to be left alone. Boomers were more likely than Millennials and GenXers to want to be left alone.

Withdrawal ‘Symptoms’

That said, roughly two-thirds say they know how much to withdraw for living expenses, yet only 6 out of 10 know how long to make their money last in retirement.

Little wonder that 7 out of 10 admit they need a “little bit of guidance” on how to withdraw money from their retirement accounts. (Just over half—52%—don’t have an advisor, however.) Market risk is (still) the top concern, cited by 32%, but just ahead of longevity risk (30%). Inflation and interest rate risk came in third, cited by 19%.

Speaking of withdrawal solutions, 28% said they would be much more likely to leave money in their plan if it provided an in-plan withdrawal solution, and 48% said they would be somewhat more likely to do so. Roughly a quarter (23%) said it wouldn’t have any impact on that decision.

Risk concerns diminished somewhat from a year ago. Worries about outliving retirement savings fell 5% (58% in 2021 versus 63% the previous year); inflation and interest rate risk concerns decreased 4%; and market risk worries went down 10%, as did concerns about growth.

Match Gains?

Two-thirds of respondents—including 80% of Boomers—said they would prefer an employer match contribution over a salary increase, regardless of percentage. Moreover, 82% would prefer a contribution to retirement savings, compared to 12% who would prefer a contribution to education costs.

As for holistic financial advice offered via their employer, roughly three-quarters (73%) find that concept at least somewhat attractive, with those with incomes above $100,000, Millennials and GenXers more likely to agree.  

Just over half expressed interest in ESG investments as part of their retirement plan (those with incomes above $100,000 were more interested, and Millennials and GenXers were most interested). Six percent would be interested even if the performance of those investments was worse, 29% if performance was better—and 65% if the performance was at least comparable.

The ninth annual study, comprised of responses from 1,500 full-time workers between the ages of 25 and 65 saving through their employer’s retirement plan and grouped by the categories of Baby Boomers, Generation X and Millennials, was conducted March 8-19, 2021. Data collection and analysis were completed by Mathew Greenwald and Associates of Washington, D.C.