With debt ceiling near, employee benefits in the crosshairs
Originally posted October 16, 2013 by Gillian Roberts on https://ebn.benefitnews.com
Wednesday's last-minute negotiations on raising the nation’s borrowing limit could impact 401(k)s, Roth retirement vehicles and more, if similar past showdowns give any indication. Bob Christenson, partner at Fisher & Phillips LLP, says he’s seen these debates on the Hill before and past lessons show that employee benefits could be impacted when the conversation turns to raising revenue through taxes.
“There may be more of a restriction on 401(k) plan contributions because they’ve done that in the past,” says Christenson, of the firm’s Atlanta office. “Everyone talks about limits on Roth contributions and the secret behind all that was — that was a revenue raising measure, too.” He also says he wouldn’t be surprised if lawmakers “tinker” with ways to make distributions on retirement savings vehicles easier because again, that would be a tax increase.
“From an employee benefits policy perspective, it’s not smart … but it’s what’s been done in the past and I wouldn’t be surprised to see it again,” he says.
Bill Sweetnam, principal at Groom Law Group in Washington, agrees that revenue raisers may be part of the equation, but nothing on a large scale. “Early on I would have said if they had done a grand bargain over the summer they could have done something with tax reform, but they don’t have the time for tax reform, so I think the employee benefits world is not going to be impacted unless they’re used as a revenue raiser that people want,” he says.
Sweetnam thinks two things could be on the table for employee benefits at this point:
1) Extending the relief that defined benefit plan sponsors get from MAP-21 interest rates — in other words, “requiring people to make higher funding contributions and thus raise revenue for the government,” he says.
2) Provide relief to multi-employer pension plans, which has been a heavily lobbied topic recently and could be a positive gesture towards benefits in all this.
Christenson says he suspects that with fewer personnel at the Internal Revenue Service, the voluntary compliance program “that a lot of qualified programs use to correct errors” will probably be down. “They’re not going to advertise that they don’t have the usual personnel,” he says. And that also goes for IRS and DOL audits and Employee Benefits Securities Administration investigations as well.
Christenson points out that there was a time when both parties discussed necessary “tweaks” to the Affordable Care Act, but with the polarization in Washington at this point, “the legislative activity of those potential changes that everyone agrees on could get changed,” he says.
Tools to Better Understand Your 401(k)
Originally posted September 11, 2013 by Philip Moeller on https://money.usnews.com
The Lifetime Income Disclosure Act proposed in May seems to have a reasonable objective: help people determine how much retirement income would be produced by their 401(k). For years, financial experts have touted the benefits of helping consumers understand their retirement trajectories. Otherwise, how will they know if they're on the right track to a successful retirement?
Reasonable or not, the legislation has become a perennial in the garden of consumer finance proposals. It gets introduced. Consumer groups applaud it. Investment firms say the goal has merit. Then they raise a host of operational problems in implementing such a law. Leading the list is their opposition to pretty much any government mandate. They prefer voluntary compliance.
[Read: How to Take Control of Your 401(k).]
Fidelity, the biggest provider of retirement accounts, responded last month to U.S. Department of Labor proposals to implement lifetime income disclosure rules: "Information provided in a static format does not promote participant engagement," Fidelity wrote in a letter to the labor department. "As an equally important consideration, the disclosures that would need to accompany the projections and illustrations would greatly add to both the length and complexity of participant statements, increasing the risk of reader disengagement from any of the information provided on the statement."
Please raise your hand along with me if you aren't really sure what this means. In Fidelity's defense, adding any additional required materials to customer statements may produce diminishing returns. Consumers have greeted recent expansions in 401(k) statements – aimed to provide more transparency to account fees and performance – with disinterest.
Many other investment firms also weighed in with their own objections. More fundamentally, exactly what assumptions about future investment returns and rates of inflation should be used in calculating lifetime income projections? What is the ideal or "right" rate of withdrawing assets from a plan during retirement? Even Nobel Prize winners wouldn't agree on such numbers.
What does Washington say? Here is the description provided by the Congressional Research Service of the current version of the proposed law:
"[The Lifetime Income Disclosure Act] requires such lifetime income disclosure to set forth the lifetime income stream equivalent of the participant's or beneficiary's total benefits accrued. Defines a lifetime income stream equivalent of the total benefits accrued as the monthly annuity payment the participant or beneficiary would receive if those total accrued benefits were used to provide lifetime income streams to a qualified joint and survivor annuitant.
"Directs the Secretary of Labor to: (1) issue a model lifetime income disclosure, written in a manner which can be understood by the average plan participant; and (2) prescribe assumptions that plan administrators may use in converting total accrued benefits into lifetime income stream equivalents."
[Read: 3 Highly Personal Threats to Your Retirement.]
Are we all clear on this?
In the interest of plain language – whether driven by government mandate or voluntary industry compliance – employees and retirees with 401(k)s and individual retirement accounts would be better off with clear answers to practical questions. Here are 10 basic retirement plan questions that merit clear and helpful answers, and some tips about trends and where to find answers.
1. Based on your current 401(k) contribution level and investment results, what kind of retirement is in store for you?
The Employment Benefit Research Institute does an annual retirement confidence survey that contains troubling conclusions about the state of retirement prospects for many Americans. The 2013 survey results can be found at https://www.ebri.org/surveys/rcs/2013/.
2. Do you know what your Social Security benefits would be for different claiming ages?
The Social Security Administration has a tool to provide you access to your earnings history and projected benefits at www.ssa.gov/myaccount.
3. Are you saving enough?
Most people should be saving 10 to 15 percent of their salaries, with higher levels needed for those who wait until their 40s to get serious about retirement savings. Yet most people are saving far less.
4. How much money do you have?
Make a date with yourself to spend an hour with your latest plan statement. It may be time very well spent.
5. What are you paying in fees?
Investment management companies have been steadily lowering retirement plan fees in response to sustained criticism and competition from Vanguard and other low-fee investment firms. The Department of Labor has a primer on retirement plan fees at www.dol.gov/ebsa/publications/undrstndgrtrmnt.html.
6. How has your account performed?
See the advice for question #4.
7. How does your 401(k) performance compare with other investment choices you can make within your plan?
This will require more work on your part, but your plan statement and usually your plan's website will include tools to let you look at investment returns of the various funds and other investment choices offered by the plan.
[See: 10 Things to Watch When Interest Rates Go Up.]
8. How does your performance compare with investment results in the plans of other companies?
Check out BrightScope at www.brightscope.com or Morningstar at www.morningstar.com/Cover/Funds.aspx.
9. What is your employer's match policy, how does it compare with industry standards and are you taking full advantage of the match?
Smart401k provides a helpful discussion of employer matches at https://www.smart401k.com/Content/retail/resource-center/retirement-investing-basics/company-match.
10. If you change jobs, what are you going to do with your current employer's 401(k)?
Many people cash in their retirement plans when they change jobs instead of rolling them over into new plans or IRAs. Most of them are making a mistake.
3 obstacles on the road to retirement readiness
Originally posted August 28, 2013 by Robert C. Lawton on https://ebn.benefitnews.com
Participants can be their own worst enemies. Shlomo Benartzi, a leading authority on behavioral finance, has identified the following three obstacles that plan sponsors need to overcome to propel participants successfully down the road to retirement readiness:
1. Inertia
Plan sponsors are probably most familiar with employee inertia. The incorporation of "auto" features — auto-enrollment, auto-escalation and auto re-enrollment — into 401(k) plans, along with the addition of professionally managed investment options like target-date funds, can successfully address employee inertia. Vanguard and The Newport Group report that approximately one-third of the 401(k) plans they administer have auto features. Experts believe that within three to five years the majority of 401(k) plans will adopt these plan design elements.
2. Loss aversion
Loss aversion may be characterized as valuing the avoidance of loss over the accrual of gains. In other words, participants are more afraid of losing money than they are of not having enough money (as a result of investing too conservatively). In order to overcome this obstacle plan sponsors need to offer target-date funds. Most experts believe that 75% to 85% of all plan participants should be invested in target-date funds. When left on their own, participants tend to invest too conservatively to keep pace with inflation, or they are prone to attempt to market time, resulting in significant losses.
Model or lifestyle portfolios aren't a solution here since employee inertia comes into play. Both of these types of professionally managed investment options require a positive employee election to move to more conservative options over time. Target-date funds do not require any employee interaction since the investment manager adjusts the risk level of the portfolio as time goes by.
3. Myopia
Myopia is the hardest factor to overcome. Participants have a tendency to focus on immediate, short-term goals rather than planning for their future. Many participants view the process of saving as difficult and not worthwhile. For example, they may feel that they will be too old to ever enjoy their savings, or they may believe they will pass away before they are able to retire. Regardless of the reason, participants are not eager to fund a future they have a difficult time envisioning. Employee education is the only effective tool to fight myopia.
Plan sponsors who adopt these plan design, investment and employee education elements have a much better chance of seeing their participants achieve retirement readiness.
How to Take Control of Your 401(k)
Originally posted August 27, 2013 by Scott Holsopple on https://money.usnews.com
A recent survey by Charles Schwab of 1,000 401(k) participants said that 52 percent of those polled find their 401(k) plan more confusing than their health insurance benefits. That's pretty impressive, given that I don't think I know anyone who claims to understand their medical coverage. Fifty-seven percent desired an easier way to choose their 401(k) investments.
Despite the bad press the 401(k) plan sometimes receives for its complexity and for requiring plan participants to become investors whether they want to or not, the fact remains that it is a great way to save for retirement. For many people, it's their only retirement savings vehicle. Sure, if you don't have much interest in investing and finance, you might find it confusing to manage your account — but it's up to you to do something about it.
Being a 401(k) plan participant requires you to take charge of your retirement saving and investing, so don't let confusion or uncertainties leave you on the sideline. Instead, here are five things you can do to step up:
- Embrace the power and control you have, and think hard about how to use it. Spend some time seriously thinking about your retirement saving and investing needs. Jump on some educational websites and do some reading to familiarize yourself with basic investing terminology and the types of investments to which you have access.
- Take action by creating a retirement saving and investing plan. Outline the amount you plan to contribute now and in the future in order to reach your retirement goals.
- Take advantage of your 401(k) plan's features. Many plans offer ways to maximize your participation such as an employer match, educational resources and advisory services that can help you pick the right funds to support your retirement goals.
- Check to see if your plan offers an auto-increase contribution feature, which automatically increases your contribution rate by a small amount each year (or more frequently, if you like). If your plan doesn't offer auto-increase set up calendar reminders and increase your contributions yourself. Either way, you need to save as much as you can and regular contribution increases can help you get there.
- Once you've established your strategy, stick to it. Paying too much attention to market fluctuations can cause some investors to run scared. A long-term view is what's needed, rather than concentrating on your account balance on any one day.
The 401(k) plan might not be perfect, but you stand to gain a lot when you take advantage of being in the driver's seat — just a little know-how can make a big difference when it comes to your 401(k) and financial future.
Time’s running out to start a new Safe Harbor 401(k) plan for 2013
Originally posted August 26, 2013 by Jerry Kalish
Back in April, I wrote that the Retirement Plan Season Starts Now.
“Now” literally means now for an employer who wants to start a new 401(k) plan this year and take advantage of special tax rules that allow the plan to automatically pass the 401(k) discrimination tests.
Historically, many calendar year end companies have waited until late December to establish a new retirement plan. Employers have said “as long as my plan is in place by December 31, can’t my company consider the entire year for purposes of contributions and tax deductions?”
The answer to which is generally “yes” for most types of retirement plans, but there is a big exception for new Safe Harbor 401(k) plans.
October 1 is the due date for an employer to establish a new 401(k) plan using those special “Safe Harbor” contribution rules to permit owners and other Highly Compensated Employees to maximize their contributions regardless of how much the Non-Highly Compensated Employees contribute.
It works something like this. The employer can make one of two types of Safe Harbor contributions:
- 3% of compensation for all eligible employees, or
- Matching contribution of 100% of the first 3% of an employee’s contribution, and 50% of the next 2% of an employee’s contribution. Thus, if an employee contributes the full 5%, it will cost the employer 4%.
Bottom line: Owners and other Highly Compensated Employees would be able to defer the entire $17,500 maximum plus an additional $5,500 for those over age 50…and also receive the Safe Harbor contribution.
How is this possible if a plan is established on or before October 1? It’s simply that the 401(k) individual limit is a personal calendar year limit even though the 401(k) plan would have been in effect for less than the full year.
Here are the four things needed to get done on or before the October 1, deadline.
- The TPA provides a plan document.
- The employer establishes a trust account.
- The advisor helps the employer select a 401(k) provider.
- The adviser helps communicate the plan to the employees.
There is still time for an employer to establish a new 401(k) plan, and maybe even qualify for the retirement plan start-up tax credit.
This article is for general information and discussion purposes only. Employers and employees should always seek the advice of experienced tax advisors for the application of the tax rules to their specific situation.
Investors Seek Help With 401(k) Plans, Survey Finds
Originally published August 26, 2013 by Mary Ann Tasoulas on https://www.financial-planning.com
This according to a nationwide survey of more than 1,000 401(k) plan participants, commissioned by Schwab Retirement Plan Services. Respondent findings show a high level of self-reliance. Approximately nine in 10 (89%) say they will be responsible for coming up with the money to support themselves in retirement. Five percent indicated that their financial help will be provided by the government upon completion of their full time employment.
This self-reliance is fueled by the anticipated use of 401(k) plans.
• 61% report the 401(k) is their only or largest source of retirement savings
• 55% have increased their savings rate in the last two years
• 70% say their 401(k) is in better shape now than ever before
“It’s gratifying to see so many people taking the reins of their retirement,” said Steve Anderson, head of Schwab Retirement Plan Services in a statement. “In our view, contributing to a 401(k) plan should be the number one savings priority for workers. Planning ahead, taking action and getting the help you need along the way are key steps to help build sufficient retirement savings.”
UNSURE HOW TO INVEST
The survey reveals that saving in a 401(k) is not enough to instill confidence for many participants.
• 52% find their 401(k) investment explanations even more confusing than that of their health care benefits (48%)
• 57% would like an easier way to figure out what 401(k) investments are right for them
• 46% don’t feel they know what their best investment options are
• 34% feel a lot of stress over correctly allocating their 401(k) dollars
SEEKING HELP
Many 401(k) plans offer some type of professional advice, which can be instrumental in helping people take better control of their investments. Of those surveyed, 61% want personalized investment advice for their 401(k). Participants requested the need for guidance on everything from asset allocation to risk tolerance and retirement income planning.
First and foremost, the survey showed that investment confidence nearly doubled when workers have the help of a financial professional. Approximately one-third (32%) of survey respondents expressed confidence in making the right 401(k) investment choices based on their own ability, compared to 61% if they also had the help of a financial expert.
“Getting more workers engaged in professional 401(k) advice should be a top priority for employers. We’ve seen the positive impact it can have on both behaviors and outcomes,” said Anderson. “At Schwab Retirement Plan Services, Inc., participants who used third-party, professional 401(k) advice tended to increase their savings rate, were better diversified and stayed the course in their investing decisions,” he said in the same statement.
6 solutions to the retirement crisis
Originally posted by Paula Aven Gladych on https://www.benefitspro.com
Chad Parks, president and CEO of The Online 401(k), wants to find a solution to the retirement crisis in America. He and some colleagues drove cross-country last year interviewing people from all walks of life about their retirement savings and their ability to retire. They put their findings into a film called, “The Looming Retirement Crisis in America.”
After doing his research, Parks believes there are six major obstacles to retirement in America, but the good news is that there are also solutions.
(By the way, if his solutions seem a bit obvious to you, it’s because you’re in the business and have been paying attention. And if that’s the case, Parks’ list could only help you make your case with prospects).
Coverage
According to Parks, people need to save at work but to do that, they need an employer that offers a retirement plan. More than 40 million workers cannot save at work because they don’t have access to any sort of plan.
The solution? Mandated retirement savings plans, like auto IRAs, USA Retirement Accounts, 401(k)s and others.
Participation
Getting people to actually save money can be difficult. Some individuals won’t save for retirement even if they have access to a work-based plan.
The solution? Automatic enrollment. Features like this, added to an existing 401(k), have been shown to improve participation rates because the number of people who opt out of plans after being automatically enrolled is very small.
Saving enough
Many people don’t save enough for retirement and, even if they do save, they never increase the amount they save over their lifetime. A lot of workers save 3 percent their entire working lives, which isn’t enough to provide lifetime income in retirement.
The solution? Automatic escalation. Plans that offer this feature have had great success in building employee account balances. Every year, automatically, these plans increase employees’ deferrals into their retirement savings plan by at least 1 percent. The goal is to have everyone save between 10 and 15 percent of their pay in retirement savings over time.
Investing appropriately
Workers need to invest their money appropriately for their age, their ability to take on risk and with current market conditions in mind, according to Parks.
The solution? Cost-effective professional advice. Studies have shown that workers who confer with a financial professional save and invest more appropriately for their own situation than those who don’t work with an advisor.
Accumulation/adjustment
Accumulation of money is not the only goal, according to Parks. It also is important to adjust a person’s savings as their life changes.
The solution? Regular annual checkups. Plan participants should revisit their accounts at least once a year to make sure they are in the right investments and not taking on more risk than they can handle.
Retirement/decumulation/lifetime income
Many investors continue to invest in riskier options well into the years when they should be scaling back on the risk and preserving their savings. They also don’t know how to prudently “decumulate” their money and haven’t explored lifetime income options.
The solution? According to industry experts, many retirement plans don’t advise individuals to annuitize even if it would be in their best interest to do so. Instead, they handle longevity risk by setting a higher age for the end of the planning period. Seeking advice about annuitization can help individuals decide whether purchasing an annuity for guaranteed lifetime income is a good option for them.
DOL changes timing of required employer 401(k) and 403(b) disclosures
Originally published by Brian M. Pinheiro and Robert S. Kaplan on https://ebn.benefitnews.com
The U.S. Department of Labor yesterday released Field Assistance Bulletin 2013-2 granting employers that sponsor participant-directed individual account plans (such as 401(k) and 403(b) plans) the ability to delay this year’s disclosure of annual investment-related information to plan participants and beneficiaries. Employers were required to provide the original notice by August 30, 2012. The DOL regulations require that the notice also be distributed “at least annually thereafter.” This means each annual notice would have to be distributed within 12 months of distribution of the prior year’s notice.
Critics of the annual notice requirement have complained that August does not correlate with any other annual participant disclosures for calendar-year retirement plans. Consequently, the DOL is permitting employers a one-time delay in distributing the annual notice. For 2013, the plan sponsor may wait up to 18 months from the date of distribution of the prior notice to distribute the new annual notice. This delay will allow employers to put the annual notice on the same schedule as other annual participant disclosures, such as notices for Qualified Default Investment Alternative or safe harbor status.
Recognizing that some employers have already prepared or mailed notices in anticipation of this August 2013 deadline, the DOL also permits employers who do not take advantage of this relief during 2013 the same 18-month period for 2014 annual notices.
Most third-party administrators and vendors prepare these annual notices for employers. Employers should keep in mind that the notice is an obligation of the plan sponsor and not the vendor. Plan sponsors should carefully review the notice to ensure that it is accurate and meets all legal requirements.
Retirement across America: Lessons learned
Originally published July 19, 2013 by Chad Parks on https://ebn.benefitnews.com
For six weeks last spring, I traveled across the country filming interviews for an upcoming documentary called Broken Eggs: The Looming Retirement Crisis in America. I am executive producing the film, which is an honest, unfiltered look at the state of retirement in our country.
We set out to learn more about how Americans view retirement and whether or not the looming retirement crisis is as serious as we feared.
It was an eye-opening experience that discovered some bright spots, as well as some really life-altering and depressing stories.
After having had a year to reflect on the initial trip as we near the film’s completion, I wanted to share with you, my industry colleagues, the four lessons I learned on this journey.
Lesson 1: People are aware of the problem
One preconceived notion I had before going on the trip was that Americans were blissfully unaware of the retirement crisis. I figured few knew that Americans are $6.6 trillion short of what they need to retire. In fact, most are acutely aware of the hurdles they’re facing. Unfortunately, that doesn’t mean they’ve changed. Most are unsure of what to do and are overwhelmed, which leads to inaction being their only action. But this crisis is on their minds — and they want a solution.
I’m encouraged to see this issue hasn’t fallen by the wayside, but the challenge is to get Americans to take action.
Lesson 2: Our industry is in a bubble
Sure, we all know what the terms “401(k),” “intelligent design,” “automatic enrollment” and “model portfolios” mean. But after this trip, I can say that it’s a foreign language to everyone outside our retirement industry bubble. We’ve done a fantastic job of complicating things, and the fallout is that there is a severe disconnect.
What are we trying to accomplish by hiding behind jargon? In order to begin to solve this problem, we need to simplify retirement and humanize it. Perhaps there’s a universal way to gamify this problem in order to engage more people. Some have proposed a retirement scorecard, while others suggest the “set it and forget it” plan. Regardless, we need to get out of our bubble and understand that people are busy and not experts in retirement.
Lesson 3: Retirement income is grossly misunderstood
Though I found that Americans are aware of the retirement crisis, many believe that Social Security will bail them out. I encountered far too many people who are counting on Social Security as their primary or only retirement income vehicle.
As you well know, Social Security exists to make sure our seniors aren’t destitute – not so they can comfortably retire. With Social Security slated to be insolvent in about two decades, our industry needs to educate plan participants on what Social Security can do – and more importantly, what it can’t do.
We must stress that the three-legged stool of retirement no longer exists, and the one leg that is left is not Social Security (or a pension); personal savings is what will fuel retirement now and in the future.
Lesson 4: There is not a single, simple solution
If there was a solution to this problem, it would have already been implemented. In addition to interviewing everyday Americans, I spoke to industry thought leaders and influencers from across the spectrum, including Brian Graff of ASPPA and Teresa Ghilarducci from The New School.
In order to curb the looming retirement crisis, we can’t rely on a one-fix solution. My hope is that putting forth a blend of ideas will ultimately become a reliable solution.
We can never get to that point, however, unless we start discussing this problem. And I’m not referring to talking amongst ourselves. We need to engage our customers, the American people, and drill this problem into their heads.
As an industry, we need to do a better job of setting the pace for this discussion, which must be personalized. And instead of just talking at people, we must listen, and ultimately educate. Part of the solution is to use Americans’ first-hand experiences planning for retirement to help craft solutions.
My hope is that Broken Eggs ignites a conversation among all American to solve the problem. It’s raw. It’s honest. And these stories deserve to be heard.
Will U.S. workers ever be able to retire?
Original article from usatoday.com
Despite the rebound in home prices and new all-time nominal highs in the stock market, many Americans are looking at an unpleasant retirement, if they even make it that far; according to the Employee Benefit Research Institute's latest survey on retirement confidence, the majority of workers have saved for their golden years, but the piggy bank is quite slim.
Excluding the value of a primary home and any defined benefit plans, 57% of households say they have less than $25,000 in savings and investments, while 28% say they have less than $1,000. Furthermore, the Center for Retirement Research at Boston College has warned that 53% of American households are at risk of not having saved enough to maintain their living standards in retirement.
Americans are still planning for retirement, but, as one would expect, how they have saved for retirement depends very heavily on age and on pre-retirement income.
Compared to other countries' retirement systems, that of the United States doesn't stand up well. In a recent report, the Mercer consulting firm and the Australian Center for Financial Service, gave the United States a "C" grade, a rating considerably worse than the A received by Denmark and the B-plus given to the Netherlands' retirement system, which combines a Social Security-like fund with a nearly universal pension system to which employers contribute. The study showed plainly that many other countries are more willing than the United States to mandate unpleasant steps by workers and employers to fund a stable system.
The United States does have some mandates; employers must pay 6.2% of each employee's salary into Social Security, and every employee must also contribute that amount. But the Social Security system faces the threat of a huge shortfall. One-third of America's retirees get at least 90% of their retirement income from the program, with annual benefits averaging a modest $15,000 for an individual.
Another important pillar of America's retirement system, the 401k, is voluntary and generally not accessible to low-wage workers, who may not have the income necessary to invest. Although some employers have embraced automatic enrollment for their workers, more than 58% of American workers are not in a pension or 401k plan. Those employees with such plans, whose payouts are dependent on contributions and investment returns, are exposed to the risks associated with the stock market, which after the financial crisis were quite great.
The problems associated with these two primary means of saving dictate which financial sources fund the retirements of lower-wage workers and higher-wage workers. Gallup's annual Economy and Personal Finance poll, conducted between April 4 and April 14 of this year, sampled more than 2,000 adults to discover how non-retired Americans expect to fund their retirement. The results show that expectations varied significantly by annual household income. Upper-income retirees primarily said that investments, such as 401ks, or individual stock investments would fund retirement, while lower-income respondents said that Social Security and part-time work would be major sources.
In fact, of those respondents earning $75,000 or more per year, 65% said that retirement savings accounts would be the "major source" of retirement funds, and only 17% said Social Security. Comparatively, 42% of respondents earning less than $30,000 per year said Social Security would be a major source of income, 27% said work-sponsored pension plans, and another 27% said part-time work.
Younger generations of workers, particularly the 18 to 29 year-old bracket exhibited uncertainty about the future of the Social Security. Gallup found that only about one in five young adults expected to receive a Social Security benefit when they retire. Fifty-three % of respondents from the youngest age group said that they expected to fund their retirement through 401ks, while 49% said savings accounts or CDs and 24% said part-time work.
When looking at retirement strictly through the lens of age, the poll's results show the changing nature of retirement funding. Young respondents are looking to sources outside of Social Security to support them after they stop working, but those nearing retirement age now see Social Security contributing significantly to income — the program is essentially tied with 401k plans as the top source among 50 to 59-year old non-retirees, and it is the number one source among non-retirees aged 60 and older.