Hold Back on Those Christmas Gifts. You'll Need the $ for Retirement
Posted Dec 03 2012 9:00am
Aon Hewitt’s Real Deal studied the retirement resources and
needs for 2.2 million employees of 78 large US employers. The study projects
employees’ retirement resources and needs assuming their current behaviors
The study focuses on full-career contributing employees as
the baseline. For this purpose, “full career” was defined as an employee with
the potential to work 30 years or more with their current employer prior to
The study projects that the employees who currently
contribute to their employers’ 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.
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.
pay shortfall: An average full-career contributing employee is
expected to have 8.8 times pay in resources at retirement, leaving this
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.