(Bloomberg) — Americans are more worried about retirement, and they’re getting less help saving for it.
Employers cut their contributions to workers’ retirements by a quarter from 2001 to 2015, according to a new report by the consulting firm Willis Towers Watson. The biggest driver: the decline of traditional defined-benefit pensions, replaced by stingier, 401(k)-style, defined-contribution plans.
(Related: 18 Reasons Americans Are Afraid to Retire )
Retirement benefits—including employer contributions to pensions, 401(k)s and retiree health care benefits—fell from 9.1% of worker pay in 2001 to 6.8% in 2015. Spending on traditional pensions plunged 76%, to less than 1% of worker pay. Medical benefits for retired workers became increasingly scant, falling from 1.2% of worker pay to just 0.2%.
The good news is that many companies, while shutting down or freezing pension plans, have sweetened their 401(k) matching contributions. Some large employers, eager to recruit top job candidates in such hot areas as technology, have boosted benefits, as the Wall Street Journal reported on Monday. An executive at Microsoft Corp. in charge of benefits told the Journal that the company’s newly generous employer match had proved so popular that “it’s blowing my budgets.”
But higher 401(k) matches aren’t making up for the loss of other retirement benefits overall, and even the most generous 401(k) plans usually lack a traditional pension’s biggest selling point: a guaranteed income for life. With a 401(k), it’s up to individual workers to figure out how much they should be saving—and how to make the money last, once they’ve retired. (See “How Much Should You Save for Retirement?” and “Rich Retirees Are Hoarding Cash Out of Fear.”)