"Employees might be on firmer financial footing now than they were five years ago, but many remain nervous about their finances and prospects for a secure retirement," Shane Bartling, senior consultant at Towers Watson, said.

"This is especially true for older workers who are likely better positioned to assess their retirement income than workers overall. The financial crisis hit workers age 50 and above particularly hard, with the stock market fall creating a huge dent in their retirement savings and their confidence levels."

The survey also found that workers are worried about the affordability of health care in retirement and the outlook for entitlement benefits.  Only two in five employees believe they will be able to afford medical expenses that they incur in the next 12 months; those concerns are greater for mid-career and older workers. And more than half of all employees, 53 percent, are worried they will not be able to afford the health care they need in retirement.

At the same time, a whopping 83 percent of workers believe Social Security will be less valuable in the future and 88 percent fear the same about Medicare.

The good news is that employees are being proactive about their financial situation. More than half of workers, 56 percent, say they are spending less and putting off big purchases. They acknowledge they need to save more for retirement and are becoming more interested in planning for it.  More than half, 51 percent, say they review their retirement plans frequently.

The survey showed that saving for retirement is cited as the top financial priority for all workers age 40 and older.

"Employees are getting the message that their future health care costs should be an integral factor in their retirement planning. Escalating health care costs continue to claim larger shares of paychecks. And workers' pessimistic outlook for Social Security and Medicare adds not only to their expected financial burden but also to the age at which they retire," David Speier, senior consultant at Towers Watson, said.

Indeed, nearly four in 10 plan on working longer, up nine percentage points from 31 percent in 2009. The majority of them expect to delay retirement by three or more years, while 44 percent plan to delay it for five years or more.

The survey found that only 25 percent plan on retiring before 65 and half expect to retire after 65. One in three employees either does not expect to retire until after 70 or doesn't plan to retire at all.

The survey was conducted between July and September 2013 and included 5,070 full-time workers in the U.S., representing all job levels and major industry sectors. The margin of error is plus or minus 1.4 percent.