While many American workers and employers are still recovering from the Great Recession, a new report from the Transamerica Center for Retirement Studies, A Retirement Security Retrospective: 2007 Versus 2017, indicates that retirement confidence levels and savings rates are improving.
- Household savings in all retirement accounts have dramatically increased since their pre-recession levels including among Millennials ($9,000 in 2007 to $36,000 in 2017), Generation X ($32,000 to $71,000), and Baby Boomers ($75,000 to $157,000) (estimated medians).
- 401(k) plan participation rates remain strong. Among workers who are offered a 401(k) or similar plan by their employers, approximately eight in 10 participate or have money invested in the plan. This finding remained relatively consistent between 2007 (77 percent) and 2017 (80 percent).
- Most participants use professionally managed offerings, such as a managed account service, strategic allocation funds, and/or target date funds (net: 58 percent). Comparative data for 2007 is not available.
- Retirement plan leakage is an issue. Loans and early withdrawals can severely inhibit the growth of participants’ long-term retirement savings. By 2017, 30 percent of workers had taken some form of loan and/or early withdrawal from a 401(k) or similar plan, or an IRA.
- Many are still “guessing” their retirement savings needs. In 2017, workers estimated they would need $500,000 (median) in retirement, less than the $650,000 (median) found in 2007. Almost half of workers (49 percent) who provided an estimate of their retirement savings needs in 2017 said that they “guessed” the amount needed, a finding that is only slightly lower than 2007 (51 percent).