There seems little doubt that America faces a looming retirement-income adequacy crisis. By virtually every measure, employees haven’t saved anywhere near enough to fund their retirement. To cite just a few of many studies on the subject, a recent McKinsey report estimates that the average American faces a 37% shortfall in the income needed in retirement. Boston College’s Retirement Readiness Index estimates 51% of Americans will not be able to maintain their preretirement standard of living. And introducing potential health care and long-term care costs increases the index to 66%.
Yet, despite these unmistakable warning signals and other surveys indicating employees increasingly are concerned about their retirement readiness, the typical employee communications used to promote employer-sponsored retirement savings programs show little evidence of the looming crisis. One only sees images of healthy senior citizens sailing, playing with their grandchildren, volunteering or traveling to exotic destinations. Go ahead – grab the first 401(k) brochure within reach. Doesn’t it paint a sunny picture? Is there even the slightest hint of the consequences of not saving enough?
