Retirement Security

MetLife's Key Points on Retirement Security

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Too many Americans are not saving enough for retirement. About half of households age 55 or older have no retirement savings and for those that do have savings it is often not enough to continue their current lifestyle.

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In the face of the steady decline of defined benefit programs, Americans retiring today and in the future are under increasing pressure to provide for their own retirement security through programs such as 401(k)s and IRAs.  

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For most Americans, the workplace provides access to retirement plans that can support a future that is financially secure.

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To help employees address market risk, inflation risk and longevity risk when planning for retirement, the focus of retirement plans needs to shift from savings to income.

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Small businesses don’t have the same resources as larger companies when it comes to providing workplace retirement plans and Congress should move forward with plans that would allow groups of small companies to jointly offer retirement plans to their workers.

Note: These resources are provided to broaden information about retirement security but MetLife do not imply support all of the positions or specific recommendations of outside papers or organizations.

Retirement Security FAQ's

Do Americans generally have enough money set aside for retirement security?

A 2015 GAO report found that many retirees and workers approaching retirement have limited retirement resources. About half of households age 55 and older have no retirement savings such as a 401(k) or IRA. Among those with some retirement savings, the median amount of those savings is about $104,000 for households age 55-64 and $148,000 for households age 65-74, clearly insufficient for the 20-30 years they are likely to need to pay household expenses, to the extent those are greater than the amount of income Social Security and income from a pension plan, if any, can cover.

How do Americans use private sector financial security products?

Today, there is less confidence in government social safety nets and more pressure on individuals for financial security. Further, MetLife’s 14th Annual U.S. Employee Benefit Trends Study found that over half of employees (55%) are worried about the sufficiency of their retirement savings. Private protection products including life insurance, income annuities and disability insurance supplement social insurance and guard against poverty when families and individuals face premature death, health issues or the end of employment income that comes with retirement. These products are growing in importance as life spans increase and the traditional workplace defined benefit plan has all but disappeared for most workers.

Where do most people gain access to private sector retirement security plans?

Nearly 80% of full-time workers have access to a workplace retirement plan, and more than 80% for workers with access participate. Employer-sponsored retirement plans offer more than 83 million American workers and their families the opportunity to accumulate savings and improve retirement security. For low and moderate income workers, 71% are more likely to save for retirement when an employer offers a plan. The lowest quintile income workers, for whom all of current income is needed to support current household needs, are least likely to have access to a plan or to contribute to one if available. These are the workers for whom Social Security will replace the highest percentage of their employment income in retirement.

What role can guaranteed lifetime income play in a successful retirement plan?

Over half, 55%, of employees worry about outliving their retirement savings, according to MetLife’s 14th Annual U.S. Employee Benefit Trends Study. From market risk to inflation risk to the reality that Americans are living longer than ever before (i.e., longevity risk), employees are facing a whole new set of challenges when it comes to retirement income planning. With the shift from defined benefit to defined contribution plans, participants have found themselves in the past decade in a position to need to figure out – often largely on their own – how much to save for retirement, how much they can draw down from their savings in retirement and how long they are likely to live. Because of this, 85% of employers now believe that retirement income should be the outcome of any retirement plan, according to MetLife’s 2016 Lifetime Income Poll. This a big shift from the 9% of plan sponsors who said that retirement income should be the primary focus of DC plans in 2012. Incorporating an income annuity into a retirement plan ensures that employees’ retirement savings can be converted into a predictable stream of income that will last throughout their lifetime.

Does Metlife support current congressional legislation promoting the creation of open Multiple Employer Plans (MEP) to increase retirement savings plan options in the small business arena for their workers?

Yes, we believe that open multiple employer plans would encourage and facilitate participation by employers that are not prepared to sponsor their own retirement plan for a variety of reasons. MEPs can be an important tool in reducing the costs and administrative burdens to small employers. MEPs offer the same key protections and benefits of any employer-sponsored retirement plan to participants, such as fiduciary protections, robust contributions levels, and employer contributions, without the cost and administrative burden that often deters small employers with limited staff and resources from offering a plan.