But boomers’ retirement confidence level has dropped
If there’s anything for which policy makers can take credit respecting the divisive debate over Social Security reform, then it lies in Americans’ renewed appreciation of the value of retirement planning, say the authors of a new survey.
The “Seventh Annual Transamerica Retirement Survey” was released this month by the Transamerica Center for Retirement Studies, Los Angeles, Calif. The report polled 603 employers and 1,387 workers nationwide about their attitudes regarding retirement security and benefits.
“We were taken aback by the impact of all the dialogue about Social Security and its future,” says Catherine Collinson, a senior vice president at the center. “This year, more than any other year, we’ve seen changes in savings rates, confidence levels and the value that boomers place in employer-sponsored retirement plans. The [changes] are truly pronounced.”
The changing attitudes are evident in workers’ rising interest in employer-sponsored retirement benefits. Sixty-one percent of employees consider a company-funded defined benefit plan “very important,” while 74% see an employee-funded retirement plan such as a 401(k) “very important.” These figures compare to 46% and 66%, respectively, for 2004.
The heightened importance employees attach to retirement benefits is getting through to employers. This year, 85% of employers say an employee-funded retirement plan was important to employees, up from 77% last year. Also, more companies believe a 401(k) or similar plan is key to attracting and retaining workers (79% in 2005 vs. 75% in 2004).
Similarly, 72% of employers believe that workers prefer excellent retirement benefits over a higher salary. That’s a major reversal from last year’s survey, when only 34% of employers expressed this view.
The change in sentiment, Collinson notes, likely contributed to the actual increase in the percentage of respondents who work for companies offering a 401(k). The figure in 2005 stood at 77%, vs. 73% in 2004.
“The increase in how much workers value having–and are asking for– employer-sponsored retirement plans is undeniable,” she says. “Small business employers, in particular, are tuned to the added interest and media attention on these plans.”
The renewed attention on retirement plans is reflected in workers’ more sobering assessment as to when they can retire, boomers included. Survey respondents occupying this age bracket expect on average to retire at 64, up from 63 in 2004. Among all employees, 46% say they could work to age 65 and still not have enough money saved to meet retirement needs.
Retirement confidence levels also have dropped: Twenty-three percent of those polled say they are “very confident” about achieving a comfortable lifestyle in retirement, compared with 31% last year. Among boomers, the figure dropped from 20% in 2005 from 26% in 2004.