US employers doubt employees’ ability to achieve a financially secure retirement
Only 16 percent of employers are “very confident” their employees will be able to achieve a financially secure retirement. This statistic was brought to light thanks to a recently completed survey titled Striking Similarities and Disconcerting Disconnects: Employers, Workers, and Retirement Security, by nonprofit Transamerica Center for Retirement Studies (TCRS).
Given the large role employers play in this field, the statistic is alarming, yet it does correspond with the 18 percent of employees who are “very confident” they’ll be able to fully retire with a comfortable lifestyle.
The TCRS 18th Annual Retirement Survey, released August 21, 2018, looked at 1,825 employers for for-profit companies with five or more employees. The goal? To learn how these companies are helping employees prepare for retirement. The study also provided some context by comparing employer findings with TCRS’ survey of 6,372 workers.
Getting into specifics, the survey outlined a number of ways employers are out-of-sync with workers in both their perceptions and business practices. For example, many workers plan to work past age 65, but employers and employees in the like are unsure if the employer will support them.
In addition, just 20 percent of employers offer a formal phased retirement program, although 47 percent of workers surveyed envision a phased transition that includes reducing work hours or working in a different capacity that’s less demanding.
The survey also took a closer look at the current state of 401(k)s and opportunities to enhance retirement security. Catherine Collinson, CEO and president of TCRS, reiterated that 401k opportunities continue to be an effective way to facilitate long-term savings among workers.
However, “not all workers have equal access,” Collinson said. “For example, large companies typically provide more robust benefit offerings than their small business counterparts.”
The study examined the current state of 401(k)s and other benefit offerings by small (5 to 99 employees), medium (100 to 499 employees), and large companies (500+ employees).
Other key findings included that retirement plan sponsorship rates increase with company size, most non-sponsors are not planning to offer a plan, and few part-time employees are eligible to participate in these plans.
Additionally, adoption of automatic enrollment, surprisingly, is low. Although 81 percent of workers find automatic enrollment appealing, only 22 percent of plan sponsors have adopted automatic enrollment, including 28 percent of both large and medium companies.