Without the workplace benefit only 5% of plan participants save for retirement on their own, suggests data prepared for The American Society of Pension Professionals & Actuaries by the Employee Benefit Research Institute.

The Legg Mason Retirement Advisory Council announced a white paper Tuesday, “The Savings Crisis of Working Americans: The Retirement Industry Call to Action” that examines the retirement savings shortfall and calls on the retirement industry, employers, working Americans, financial advisers and the federal government to come together to develop solutions that improve the savings rate in the U.S.

“Solving the retirement savings crisis has to be a team effort,” says Gary Kleinschmidt, head of Retirement for Legg Mason. “To preserve the American dream of retirement, all key stakeholders must commit to working together to develop new solutions that enhance the financial literacy and retirement savings of American workers.”

In addition to over-communicating the importance of saving more to better prepare for retirement, advisers must serve as an advocate for their clients by working closely with plan sponsors to promote transparency.

The white paper highlights other recommendations for stakeholders:

  • The retirement industry — Asset managers and defined contribution providers must look to develop innovative products and services that enhance the plans and platforms to encourage greater participation. The industry should also apply lessons learned from the DC plan design to improve the growth of Individual Retirement Accounts.
  • Employers and plan sponsors — Companies offering a DC plan should commit to improving the quality of their communications and educational initiatives. Also by offering access to professional guidance designed to help employees better prepare for retirement is a must, the paper suggests. Those companies that don’t offer a DC plan should consider taking advantage of solutions developed by payroll service providers and other retirement plan industry participants.
  • The federal government — The government should strive to create solutions that incentivize all employers — regardless of their size — to offer retirement plans.
  • Working Americans In order to save more they should start by enrolling in a dedicated retirement savings account such as a 401(k) offered by the employer; or open an IRA.  When the account is in place, they should try to save at least 10% of their income in this retirement savings vehicle.

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