Employees are thinking more about what they need to do to retire securely, but their savings habits are making that goal difficult. That’s what Financial Finesse, an independent educational company that counsels employees at more than 400 organizations about financial matters, found when it compiled its “State of U.S. Employee Retirement Preparedness” report.
The report reveals some positive developments: Over the past year, more employees are inquiring about retirement planning issues with the company’s on-staff CFPs. Specifically, they want to know how much they need to save and where to put their money. Retirement workshop attendance has increased, as is the number of employees running a retirement projection.
Further, the percentage of employees participating in an employer-sponsored retirement plan ticked up from 91 percent in 2011 to 92 percent this year. Contributions to a traditional or Roth IRA is up, rising from 21 percent in the second quarter of 2011 to 25 percent in Q2 ’12.
Yet, the report also noted that while employees are more aware of retirement planning issues today, they fall short in taking the concrete steps to make that happen. The percentage of employees who contribute enough to get a match from their employer dropped from 85 percent in 2011 to 78 percent in 2012. Also rising was the percentage of employees taking a hardship withdrawal or loan from their 401(k)27 percent last year to 34 percent.
What Your Peers Are Reading
Only 18 percent of employees feel they are on rack to replace 80 percent of their income so they can experience a comfortable retirement. That does, however, represent an increase from 14 percent reporting the same last year.