Aon HewittÛªs Real Deal studied the retirement resources and needs for 2.2 million employees of 78 large US employers. The study projects employeesÛª retirement resources and needs assuming their current behaviors continue.
The study focuses on full-career contributing employees as the baseline. For this purpose, ÛÏfull careerÛ was defined as an employee with the potential to work 30 years or more with their current employer prior to retirement.
The study projects that the employees who currently contribute to their employersÛª savings plans and who retire at age 65 after a full career will, on average, accumulate retirement resources of 8.8 times their pay. They need more, 20% more.
- 11.0 times pay: An average full-career contributing employee needs this much at age 65, after Social Security, to expect to have sufficient assets to get through retirement.
- 2.2 times pay shortfall: An average full-career contributing employee is expected to have 8.8 times pay in resources at retirement, leaving this shortfall.
Full-career employees represent only about half of the total Real Deal population. Projections for the other half of the study employees, including mid-career hires and those not currently contributing to their defined contribution plans, reveal significantly worse results.
When analyzing all employees in the Real Deal study, the average shortfall increases to 5.3 times pay. Only about 15% of all 2.2 million employees in the study have positioned themselves to have sufficient resources to meet their needs if they retire at age 65.
Results for the general U.S. population would likely reveal even larger retirement income shortfalls, compared to the results of this study. The Real Deal study uses data from large employers who generally provide larger retirement benefits and more robust employee communication about the need for retirement savings than smaller employers.
Will let this speak for itself.