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Research Summary

  • Retirement

The Future of DC Has Arrived

Improving Retirement Outcomes Now

Chief Investment Officer—Bernstein Global Wealth Management
Chief Market Strategist; Co-Head—Multi-Asset Solutions; Chief Investment Officer—Systematic and Index Strategies
Head, Research and Investment Design—AllianceBernstein Defined Contribution Investments
Senior Research Analyst—Defined Contribution
October 10, 2013

“Crisis.” That’s how most pundits grimly characterize the statistics showing that the vast majority of Americans are saving too little to fund their future retirement needs (Display) and that defined contribution (DC) plans cannot make up the difference. This gloomy scenario has led some in the retirement industry to a state of hopeless inertia, while others are determined to scrap the entire DC system and start afresh.

We disagree with pundits who say we can’t fix the DC system. In our view, DC plans and participants already have the right tools to significantly improve retirement outcomes. And the changes we need to make don’t need to be painful. Indeed, combining a few modest adaptations can effect major change.

What key variables drive a DC plan participant’s ability to achieve a comfortable retirement? How can DC plan sponsors and participants adjust and combine these variables for better synergy? And just how successful might a DC plan be? In this paper, we share our most recent research into these issues and provide specific and actionable recommendations for DC participants and plan sponsors to achieve their goals.

Most Americans Underfund Their Future Retirement Needs
Total Savings and Investment* Reported by Workers in 2013
As of March 2013
*Does not include value of primary residence or defined benefit plans
Source: Employee Benefit Research Institute (EBRI) and Matthew Greenwald & Associates

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