Use of online calculators and financial advisors boost retirement confidence, EBRI finds

The use of online calculators and retirement advisors are justifiably linked to higher levels of retirement confidence, according to research from the Employee Benefit Research Institute (EBRI). The EBRI report uses new data from the recently released 2013 Retirement Confidence Survey (RCS), analyzed using a modified version of the EBRI Retirement Security Projection Model® (RSPM).

According to the EBRI, the savings targets set by those in the lowest-income quartile who had sought the input of a financial advisor reduced the risk of running short of money in retirement by anywhere from 9 to nearly 13 percentage points, depending on family status and gender. In addition, those in the lowest-income quartile who used an online calculator decreased their probability of running short of money in retirement by 14 to 18 percentage points. The EBRI report found that those who “guessed” at retirement savings targets were less likely to choose an adequate target.

“As American workers bear a growing responsibility for accumulating retirement income and managing the drawdown of those savings during retirement, it is more important than ever that households be able to set adequate targets for their retirement savings,” said Jack VanDerhei, EBRI research director and co-author of the report. “Unfortunately, just over a quarter of the RCS respondents used either an on-line calculator or a financial advisor. Nearly half —about 45 percent—were more likely to simply guess at their savings needs.”

Source: EBRI press release PR 1004, March 29, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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