Simplification of the retirement planning process is needed, as the average expected age of retirement continues to jump and investors are increasingly stressed they might have to endure a major lifestyle change after retiring, according to a recent study released by John Hancock Financial Services.

The golden years seem a little more gray these days, according to the survey. Respondents expect to retire, on average, at 64.4 years of age, up more than three years from the survey in 2002 and five years longer than in 1995. Almost one in five, or 18%, said they do not expect to have the funds to retire by age 70 or older, nearly doubling the results from the 2002 study and more than tripling that of the 1995 poll.

Investors are also worrying about the money they will have available to them once they leave the workforce. Nearly 70% of the survey's respondents said they are somewhat or very concerned that they will not have the money needed to live comfortably once retired, an 11% jump from two years ago.

Aside from stashing cash into 401(k) accounts, most participants are almost entirely disengaged from the retirement planning process, according to Wayne Gates, general director of market research and development at John Hancock Financial Services and author of the study. "Even during boom years, they essentially were leaving retirement security to luck," he said. "Belatedly, they may be coming to this realization and now fear they're running out of time and luck."

The study, which polled 800 defined contribution plan participants, suggests that since participant behavior will not change, as evidenced by the survey's results for more than a decade, a new approach is needed. That approach should include encouraging participants to seek out professional planning assistance while also nudging plan sponsors to redesign plans to reflect human behavior rather than economic theory.

"We need to dramatically simplify the retirement planning process. The solution isn't more education. It's more simplification and more automation," Gates said. Relying on the theory that investors would take it upon themselves to learn how to invest responsibly for retirement if the right combination of investment and educational tools were provided is faulty. "We've had more than a decade of educational efforts and investing experience, including a full boom and bust market cycle, and most participants are no more knowledgeable, nor any more engaged today than they were in 1991," Gates said

Most participants have very limited active involvement with their plans, with just more than half even calculating how much savings they will need to maintain their existing lifestyle once they retire, the survey found. Nearly half have never changed the amount they contribute to the plan or their asset allocation, while almost 60% have failed to make any changes in the last year.

More than half of respondents said they don't have time to manage their investment and spend only 20 minutes or less a month monitoring their retirement investments or planning. About half said they have little or no investment knowledge, while less than one in five consider themselves relatively knowledgeable, figures Gates said grow consistently worse with each survey.

Even if participants are inclined to play a bigger role in their own planning for the future, they still remain unequipped to understand basic investing concepts and many have unrealistic goals about their returns on investment, according to the study. Forty percent claimed ignorance as to what to expect from their stocks, bonds, money market funds or stable value investments in terms of returns over the next five to 20 years. The remaining 60% have "overly optimistic" expectations, Gates said.

Most of the respondents may also have to pare back their shuffleboard plans and postpone moving to Florida. The survey finds that average retirement plan balance is just under $50,000, down from nearly $55,000 just two years ago. Clearly, most respondents are not on their way to achieving the 75% of pre-retirement income necessary to maintain the same lifestyle in retirement.

Automatic enrollment upon eligibility in the plan is one of several options that would assist participants in saving for retirement, the survey asserts. Also, providing a default option that would automatically allocate contributions into the right equity and fixed- income mix based on specified criteria such as age and risk tolerance would be beneficial to investors, Gates claims. Furthermore, automatic periodic rebalancing of portfolio holding as well as regular increases in the contribution rate to coincide with salary increases should help.

"It should be painfully clear by now that while most individuals are more than willing to save for retirement, they either can't handle or don't want the responsibility of investing for retirement," Gates said.

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