People Love Pensions, Remain Skeptical About Annuities
October 23, 2019 by Evan Simonoff
Over the last 20 years, the number of Fortune 500 companies offering traditional defined-benefit plans has dropped from 59% to 16%. If that figure is 16% at Fortune 500 companies, one can reasonably assume that it is lower at other employers.
According to BlackRock’s annual DC Pulse survey, the number of defined-contribution plan participants concerned about retirement income climbed to 62% from 51% in 2018. It’s not clear what’s driving it, but constant recession talk, the decline in interest rates and the equity market correction in 2018’s fourth quarter can’t have boosted their confidence.
As BlackRock sees the landscape, it is quite possible retirees “will have to consume all of their retirement savings as efficiently as possible” or face drastic “cuts in their lifestyle.” For most Americans, the latter choice looms large.
A 2017 study found that most retirees still had 80% of their pre-retirement savings after two decades of retirement. Certainly, healthy stock market returns have helped, but it’s also likely many people at all wealth levels have scaled back their lifestyles.