Despite a slow rebound by the economy, many employees continue to be concerned about their ability to retire and are taking steps to get their financial houses in order.
A new survey by global professional services company Towers Watson found that the percentage of workers who said they were very or somewhat confident about having enough resources to live comfortably 15 years into retirement increased from 62 percent in 2010 to 68 percent last year. Workers are less confident about living comfortably throughout retirement, with less than half of respondents saying they were very or somewhat confident they will have enough resources to last 25 years into retirement. This compares to 40 percent who said they were very or somewhat confident in 2010.
The survey also found that fewer employees are experiencing significant declines in their pension and retirement savings – 47 percent in 2011 versus 55 percent in 2010 and 60 percent in 2009. Additionally, employee satisfaction with their household finances continued to improve, jumping from 33 percent in 2010 to 41 percent in 2011. Despite this upturn, three in five workers (59 percent) remain generally unsatisfied with their financial situation.
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"As the economy shows periods of stable ground, employees are slowly beginning to be more optimistic about retirement," said Kevin Wagner, a senior retirement consultant at Towers Watson. "However, the financial crisis was jolting to American workers. As a result, many employees are more financially conservative today and have a renewed interest in improving their financial decisions and planning and saving for retirement."
The report also found that 49 percent of people with defined benefit pension plans are more satisfied and confident with their household finances, compared to 29 percent in 2010. DB participants are more than twice as likely to feel "very confident" about the first 15 years of retirement and 2.5 times as likely to contemplate a 25-year retirement with confidence compared with workers with only a 401(k) plan.
A larger percentage of younger workers (under age 40) were also satisfied with their household finances last year (47 percent) compared with 2009 (28 percent). However, nearly two in three (66 percent) of young workers said they will need to save much more in the future to achieve a comfortable level of retirement income. Moreover, the percentage of young workers who carefully reviewed their retirement plans increased by more than 40 percent between 2010 and 2011.
"While the depressed economy may have triggered some of these prudent behaviors, increased attention to retirement planning, especially for younger workers, can be a helpful step for employees to save for a secure retirement," said Bill Daniels, a senior retirement consultant at Towers Watson. "This is an opportunity for employees to make positive strides for their future. It can also be an opportunity for employers to take advantage of emerging education and planning technologies to drive up appreciation of benefits programs."
The Towers Watson Retirement Attitudes Survey was conducted in June/July 2011 and includes responses from 9,218 full-time U.S. employees at non-government organizations with 1,000 or more employees. Towers Watson is a global professional services company that helps organizations improve performance through effective people, risk and financial management.
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