On the Department of Labor’s radar screen: requiring DC plan administrators to adjust the benefit statements they distribute to provide lifetime income illustrations based on current and projected account balances. So a recent study by the LIMRA Secure Retirement Institute is particularly well-timed. The study shows that not all information is equal — or even useful. LIMRA found that while most employees find retirement income projections helpful, others found it wanting.
Of those who did not find the projections helpful, approximately 70% said they were not confident that the projections were accurate or thought they were too hypothetical. Others found them to be based on incomplete data, or too confusing.
LIMRA’s Alison Salka noted that they found in a previous study that many consumers lack a clear idea of their current monthly income or expenses, and need help with budgeting skills. Salka said that this helps explain why retirement projections may not be meaningful to some participants. Other plan participants said the projections were not helpful because they were too scary, because they cannot save more than they already are or are not interested in saving for retirement.
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