Los Angeles partner Fred Reish spoke to Workforce Management Benefits on the issue of ensuring that employees understand the importance of making their retirement funds last.
In the article, Fred noted that the challenge for employees is figuring out how to make their savings last.
“Most people are taking steps that are going to cause them to run out of money, and that’s sad,” said Fred. “Plan sponsors and participants need to better understand longevity and the impact on retirement savings.”
The article also quoted his recent client alert, “The Problem With Living Too Long,” in which he said that workers need to understand they have a very good chance of living 25 years or more in retirement.
According to the article, employers are making the shift from accumulation growth education to education about making money last -- for what could be 25 years or more in retirement.
To add to this, today’s increased use of defined contribution plans has put the burden of making money last on the worker, and many workers don’t feel they have the tools to figure this out.
A J.P. Morgan Retirement Plan Services study released in June found that nearly two-thirds of plan participants didn’t know how much they should be saving, despite 91 percent saying they were responsible for their financial future. Most said they didn’t understand how to get their 401(k) savings to last throughout retirement.