Defined contribution savings plans increase odds for secure retirement

Workers whose employers offer defined contribution (DC) plans — and who stick with those plans — have a better chance at avoiding shortfalls in retirement savings, according to a report from Planadviser.

People regularly and consistently saving money through such plans for at least 20 years were much less likely to come up short, according to a new Morningstar study. Among those without DC plans, 57 percent can expect to fall short of needed savings in retirement; among those with DC savings plans, that fell to 20 percent.

The publication noted other Morningstar findings on U.S. retirement outcomes:

  • Women have a higher risk for retirement shortfalls than men
  • Single women are more at risk than those with families
  • Black and Hispanic Americans are more at risk than Whites

The retirement services firm said earlier this year that 45 percent of Americans who retire at age 65 will run short of money – a scenario they said was more likely for private-sector workers than for public-sector workers, who are more likely to have employer-sponsored pensions and retirement plans.

Access to employer-sponsored savings plans is a big part of the solution: Morningstar estimates 90 to 95 percent of employees participate when such plans are offered to them.

Wherever you are in your retirement planning, it’s always a good idea to think about what’s ahead. Next Avenue (among other publications) has a quiz to figure out what you need to know about retirement finances. It has sections on Social Security and how to decide when to apply for it, information about withdrawing funds from different types of savings plans, and useful financial strategies for retirees.

Next Avenue has also written about “unretirement” — when retired people start full- or part-time jobs after they end their careers. Some want to supplement their retirement incomes, but it’s not always about the money: Others miss working, or want to be more active, or want to start new businesses.

As some say, “retirement only means time for another adventure.” But retirees must ensure they have the means for that next adventure!