Defined contribution plan participants are concerned about how to generate income in retirement, more so than in past, according to BlackRock's latest DC Pulse Survey.
Nearly two-thirds of workers (62%) said that the thought of having to translate retirement savings into regular income throughout their non-working years worries them, up considerably from 48% last year.
Meanwhile, confidence in retiring comfortably among those surveyed stalled. Only 60 percent said they are on track to retire with the lifestyle they want, down from 61%, 56% and 52%, respectively, in the three years prior.
Workers are realizing that they have to "figure out" how to spend down their nest egg, a challenge given they "don't know how long they're going to live and they don't know what their expenses will be," said Anne Ackerley, head of U.S. and Canada defined contribution at BlackRock.
Women especially are concerned, with just 50% saying they feel they are on track to meet retirement goals, compared with 69% of men. Women are also more inclined than men to want their employers to automatically reallocate assets to more appropriate investments (71% for women vs. 59% for men) and to favor retirement investment products that generate income (45% for women vs. 38% for men).
Plan sponsors in turn are encouraging employees to use target-date funds, with 56% saying that they are most likely to promote the products among all investment options to employees, up from 39% last year.
About 8 in 10 sponsors said that "plan participants would benefit from a target-date fund that has a feature that generates guaranteed retirement income," a fact that BlackRock said pairs well with participant demand for income-generating investment options.
Eight in 10 participants said that it would be helpful if their employers could provide income-generating options in the plans and 65% said they would save more for retirement if their plan sponsors offered such options, according to the survey.
Plan sponsors also broadened access to environmental, social and governance investment options in DC plans. More than a third (36%) of employers offer ESG options, up from 26% last year.
The survey polled 228 defined contribution plan sponsors with at least $30 million in assets and 1,033 plan participants in the U.S. The plan participants were employed full-time and participating in their employers' 401(k) or 403(b) plans and had at least $5,000 in assets.