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Words of Wisdom on Retirement -- From Those in the Know

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Safeguarding the financial security of the retired -- it's the defining challenge of a global society rapidly getting older.

Consider just this: In 1935 the average life expectancy for American women was less than 64 years -- now it's over 81; according to the Max Planck Institute of Germany, most children born in developed countries since 2000 can expect to celebrate their 100th birthdays; and in the next 40 years, according to United Nations forecasts, the over 60s age-group will roughly triple in size to two billion people -- twice the rate of growth of the world's population as a whole.

A "Great Aging" is underway. But make no mistake -- despite these dizzying statistics, beating the retirement challenge is achievable with the right tools, proper support and, above all, a shared sense of responsibility.

Recently, BlackRock tapped those in the know -- current retirees -- for their insights, guidance for savers, and to measure their personal retirement experience. What we found in polling retirees (as well as current workers) may surprise you: When it comes to key "markers" of an enjoyable retirement, their real-life experience soundly beats the expectations of today's workers. What's more, retirees have some words of wisdom for workers, employers and even the asset management industry on keeping it that way for their successors in the face of daunting challenges.

As revealed by our poll, today's retirement reality is that many retirees, at all wealth levels, feel financially secure, have preserved the choice not to work anymore, can readily buy things they want, and have filled their lives with family time and favorite leisure activities.

It's a hopeful picture. But another reality is that the foundation of these highly pleasing retirements -- secure income from traditional defined benefit pension plans and the added cushion of Social Security -- may not be as readily available for future retirees.

To be sure, "secure income" covers 76 percent of expenses today, on average, for retirees we polled. But in the "new retirement" future generations are facing, such income security is at risk. Pensions are fast becoming a thing of the past, as employers shift responsibility for saving and investing directly to workers through retirement savings plans like 401(k)s. Pension income covers about eight of 10 retirees but just 37 percent of workers age 25 to 34. Filling this growing gulf as traditional income sources erode is perhaps the most urgent problem facing today's corporate retirement system.

We cannot over-rely on a government safety net either: the Federal government's recent report that the Social Security trust fund will run dry in 2033, three years earlier than projected just 12 months ago, is only the latest signal of an accelerating retirement crisis.

Many of the 70 million Americans who will retire in the next 20 years are not equipped to manage the complexities of retirement planning and funding. Many will not have the comfort of secure income without considerable investment guidance and support.

Yet there is hope -- and retirees are pointing the way by encouraging everyone to take responsibility, starting with employers. From their vantage point, more than 90 percent of retirees believe that employers should educate workers about the realities of longevity in retirement. An equal number agree that employers must offer workplace plans that can deliver a steady stream of retirement income.

Though many bemoan the loss of traditional pensions, retirees' experience tell us that defined contribution plans like 401(k)s are part of the solution: the longer they were enrolled in such programs, the more effective their retirement planning was and the more confident they are about having enough money to live on. But retirees also offer a cautionary tale to workers about their own responsibility: 78 percent of those who didn't max out contributions to their employee savings plan regret not doing so.

For our part, asset managers need to offer better workplace savings products that provide true lifetime income streams throughout retirement such as target date funds with annuity-like characteristics and other innovative savings vehicles.

And we must provide the tools and support to help employers better educate workers about the need to save sooner and more. We must help savers take advantage of their longevity -- and their ability to ride out the ups and downs of market cycles in ways their parents and grandparents never could -- by expanding financial horizons and remaining active investors throughout their retirement.

Everyone must step up to help achieve financial security for tomorrow's retirees: from employers and plan sponsors to investment managers, governments and regulators, and savers themselves. Living longer is a blessing, not a curse. We still have time to preserve the satisfying realities of retirement today for the generations of retirees to come -- if we face the challenge now.

Mr. Castille is head of Defined Contribution for BlackRock.