Insurers, the Employee Benefit Research Institute and two U.S. senators – Herb Kohl, D-Wis., and Mike Enzi, R-Wyo. – have been talking about ideas for increasing U.S. workers’ retirement savings rate.
A center affiliated with Bankers Life and Casualty Company, Chicago, 73% of middle-income baby boomers are rethinking their expected retirement date because of the recent economic slump, and that 79% of those boomers fear they may have to delay their retirement by an average of 5 years.
The center, which based those figures on an analysis of 500 U.S. residents ages 47 to 65 with incomes annual between $25,000 and $75,000, found that 14% of the survey participants believe they will never be able to retire at all.
Only 45% have $100,000 or more in retirement savings, and 71% worry about outliving their money once they retire.
The Bankers Life figures came out during a week when a number of another retirement savings reports and proposals appeared.
Automatic 401(k) Plan Enrollment
Relatively new federal laws and regulations now encourage employers to enroll workers in 401(k) plans automatically as soon as the workers become eligible to participate and require workers who do not wish to participate to take active steps to opt out.
Analysts at Principal Financial Group Inc., Des Moines, Iowa (NYSE:PFG), say they have found ways to design auto enrollment features in ways that improve participant savings behavior.
At plans administered by Principal, having workers who enroll in a plan automatically put 6% of income in the plan leads to an average deferral rate of 7.1%, the analysts say.
At plans where the default deferral rate is 3%, the average deferral rate is just 6.3%, the analysts say.
Most participants automatically enrolled in their plan sponsor’s retirement plans either accepted the default rate or chose to defer more income, the analysts found.