Workers show strong desire for enhanced incentives, willingness to
accept mandates to ensure retirement security
Millennials most likely to support mandated solutions, even for
Survey shows workers’ savings rates are too low to meet retirement
goals, but well-crafted plans that align with investors’ values can
BOSTON–(BUSINESS WIRE)–American workers are falling short of their retirement savings goals,
and according to survey findings published today by Natixis Global Asset
Management, the youngest members of the workforce, age 18-34, are
pioneering a new set of standards for employer-sponsored retirement
savings plans. The Natixis 2016 Retirement Plan Participant Study polled
951 workers of all ages across the U.S. who have access to a retirement
plan at work. The survey found that most (86%) recognize their own
responsibility to fund retirement, but they need more help from
employers – better education, stronger incentives and assistance with
other financial pressures.
According to the survey, Millennials are much more likely to want
69% of Millennials, compared to 55% of Baby Boomers, believe
individuals should be required to contribute toward retirement savings.
82% of Millennials, compared to 77% of Generation X, agree that
employers should be required to offer retirement plans.
76% of Millennials, compared to 66% of Baby Boomers, agree businesses
should be required to chip in and provide matching funds.
84% of Millennials want investment options that reflect their personal
On average, Millennials first enrolled in a retirement savings plan at
age 23, while Gen Xers signed up at age 27 and Baby Boomers at 31. Even
though they started saving for retirement earlier than previous
generations, Millennials’ openness to 401(k) mandates may stem from a
sense that retirement security is increasingly their own responsibility,
in part because they aren’t confident Social Security will be a strong
source of income. The majority of Baby Boomers (82%) are counting on
Social Security benefits in retirement, but Millennials are not as
optimistic, with only half (55%) believing such benefits will be
available to them when they retire. Although the Social Security trust
fund is fully paid for today, it will be only three-quarters funded by
“Retirement planning has become a lot more complex since the first
401(k) was introduced 35 years ago, and the burden of saving has shifted
increasingly to individuals over that time,” said John Hailer, CEO for
the Americas and Asia at Natixis Global Asset Management and Head of
Global Distribution. “Helping people prepare for retirement is one of
the most important things we do, so it’s critical that the financial
industry, business and government leaders work together to provide the
tools people need and the education to use them effectively.”
Many not on track to meet savings targets
Six in ten people surveyed claim to know how much annual income they
will need in retirement. However, both their savings goal and
contribution levels are not high enough to reach their intended targets.
Baby Boomers say they’ll need $934,677 and are 34% of the way there. Gen
Xers have 24% of their target of $810,387. Millennials have 8% of their
goal of $869,662, having started saving an average of 4-8 years earlier
than prior generations.
Even for workers who participate in their companies’ defined
contribution plans, their savings rates aren’t high enough to reach
projected targets. Two in five (41%) plan participants contribute less
than 5% of their annual salaries to employer-sponsored retirement plans.
Furthermore, some Americans are undermining their progress by scrambling
their own nest egg. Nearly one in three (28%) retirement plan
participants, including 43% of Millennials, have taken a withdrawal from
their retirement savings plan.
“Younger workers in particular are grappling with a different set of
retirement challenges compared to previous generations. Their retirement
savings strategies are encumbered by a number of factors such as student
loan debt, a lack of company pensions and a sense of doubt that Social
Security will be a source of income in retirement,” said Ed Farrington,
Natixis’ Executive Vice President for Retirement Strategies. “Employers
would do well to focus on designing comprehensive plans that offer
greater incentives and a better range of investment choices that
especially appeal to this large portion of the workforce.”
Steps plan sponsors can take
The survey found that, even when given the chance, many U.S. workers
choose not to participate in their employer-sponsored retirement savings
plans, which is true for 300 respondents in the Natixis survey. For
them, the biggest obstacle to signing up is the employer’s failure to
offer enough matching funds – or any match at all (48%). However, eight
in ten workers (80%) believe employers should be mandated to offer
retirement savings plans. And concerns over retirement security are so
high that 61% of respondents – including 58% of those who don’t
participate in the plan they have – said they are willing to accept
mandatory contributions for themselves to establish a savings discipline.
For the workers who do participate, the biggest draws are company
matching contributions (cited by 63%), tax incentives (56%) and the
convenience of having money automatically deducted from their paychecks
(52%). Additionally, over two-thirds (69%) of workers would contribute
more if their employer offered a larger match. Nearly three-quarters
(72%) believe employers should be required to provide matching
The study identifies four ways employers can voluntarily step up efforts
to improve retirement savings:
Financial advice: Professional advice/guidance leads to higher
savings levels, better savings and investing decisions. For the
participants in its survey, Natixis found that people who receive
professional financial advice have saved on average 10% more of total
retirement savings than those who go it alone, and 17% said they would
save more if they had access to professional advice. With the U.S.
Department of Labor’s fiduciary standard scheduled to take effect in
April, some workers could lose access to an advisor through their
retirement accounts. Employers could step up by offering access to
financial advice in their workplace savings plan. Just 30% of active
plan participants surveyed say they are offered that service by their
From participation to engagement: The power of participation is
in plan features that overcome savings inertia. Allowing plan
participation from the first day of employment may help improve
participation rates and increase employee contributions – 81% said
they would save more if they could start on the first day they joined
a new employer. Automatic escalation features also serve to seamlessly
increase contributions, with 23% indicating that would incentivize
them to save more.
Education: Education is needed for plan participants and even
more so for non-participants. The survey found that almost half (45%)
of all respondents, including 38% of plan participants and 60% of
non-participants, don’t know how much they need to save annually in
order to meet their future retirement goals. There is work to be done
on the financial literacy front, too. Just over half of respondents
(55%) knew the correct answer to a survey question about compounding
Tailored approaches: Employers need to look closely at the
generational differences in savings behaviors, the motivations to save
and the barriers to savings. The survey found that respondents are
holding back for various reasons, including rising healthcare costs
(35%) and saving for children’s college funds (20%). For Millennials,
33% said student loans are an obstacle. Offering programs such as
Health Savings Accounts, student loan forgiveness and higher education
savings plans would relieve pressure for many and enable them to save
“Employers have a crucial role to play to help more Americans achieve a
financially secure retirement,” Farrington said. “Our research shows
that, with or without mandates, employers can meaningfully improve their
employees’ prospects for retirement security through thoughtful plan
design. But the first step to driving participation is making retirement
plans more accessible by providing education and advice that helps
employees take full advantage of all that their retirement plan has to
Natixis Global Asset Management surveyed 951 American workers who are
eligible to participate in an employer-based defined contribution
retirement plan, such as a 401(k). Of the total, 651 workers are
enrolled in such a program, while 300 do not participate. The age groups
are broken up as follows: 285 Gen Y (18-34 years old), 283 Gen X (35-50
years old) and 383 Baby Boomers (51 years and older.) Data was gathered
in August and September 2016 by the research firm CoreData. The findings
are published in a new whitepaper, “Running on Empty.” For more
information, visit ngam.natixis.com/DefinedContributionSurvey.
About Natixis Global Asset Management, S.A.
Natixis Global Asset Management serves thoughtful investment
professionals with more insightful ways to understand and manage risk.
Through our Durable Portfolio Construction® approach, we help
them construct more strategic portfolios that seek to produce better
outcomes in today’s unpredictable markets. We draw from deep investor
and industry insights and partner closely with our clients to put
objective data behind the discussion.
Natixis is ranked among the world’s largest asset management firms.3
Uniting over 20 specialized investment managers globally ($897 billion
AUM4), we bring a diverse range of solutions tailored to meet
every strategic challenge. From insight to action, Natixis helps our
clients better serve their own with more durable portfolios.
Headquartered in Paris and Boston, Natixis Global Asset Management,
S.A.’s assets under management totaled $897 billion as of September 30,
2016.4 Natixis Global Asset Management, S.A. is part of
Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of
BPCE, the second-largest banking group in France. Natixis Global Asset
Management, S.A.’s affiliated investment management firms and
distribution and service groups include Active Index Advisors;5
AEW Capital Management; AEW Europe; AlphaSimplex Group; Axeltis; Darius
Capital Partners; DNCA Investments;6 Dorval Asset Management;7
Emerise;8 Gateway Investment Advisers; H2O Asset Management;7
Harris Associates; IDFC Asset Management Company; Loomis, Sayles &
Company; Managed Portfolio Advisors;5 McDonnell Investment
Management; Mirova;9 Natixis Asset Management; Ossiam;
Seeyond;9 Vaughan Nelson Investment Management; Vega
Investment Managers; and Natixis Global Asset Management Private Equity,
which includes Seventure Partners, Naxicap Partners, Alliance
Entreprendre, Euro Private Equity, Caspian Private Equity and Eagle Asia
Partners. Visit ngam.natixis.com for more information.
Not all offerings are available in all jurisdictions. Durable Portfolio
Construction does not guarantee a profit or protect against a loss.
1 Status of the Social Security and Medicare Programs,
Summary of the 2016 Annual Reports, https://www.ssa.gov/oact/trsum/
Natixis posed this question to respondents: Beginning with $100
compounded at 5% annually, how much would your investment be worth in
3 Cerulli Quantitative Update: Global
Markets 2016 ranked Natixis Global Asset Management, S.A. as the 16th largest
asset manager in the world based on assets under management ($870.3
billion) as of December 31, 2015.
4 Net asset value as
of September 30, 2016. Assets under management (AUM) may include assets
for which non-regulatory AUM services are provided. Non-regulatory AUM
includes assets which do not fall within the SEC’s definition of
‘regulatory AUM’ in Form ADV, Part 1.
5 A division of
NGAM Advisors, L.P.
6 A brand of DNCA Finance.
A subsidiary of Natixis Asset Management.
8 A brand of
Natixis Asset Management and Natixis Asset Management Asia Limited,
based in Singapore and Paris.
9 Operated in the U.S.
through Natixis Asset Management U.S., LLC.