Retirement security has improved for many in the workforce since 2007, but employers and employees are still in the midst of recovering from the Great Recession, with leakage from 401(k) plans remaining a big issue, a new study published Tuesday by a nonprofit affiliated with Transamerica Life Insurance Co. has found.
(Related: How Much Income Do Retirees Really Need?)
While household savings in retirement accounts held by all investing generations has surged from pre-recession levels, 58% of workers and almost half of employers surveyed admitted they were still in the process of recovering financially from the recession, according to the study, A Retirement Security Retrospective: 2007 Versus 2017, prepared by the Transamerica Center for Retirement Studies.
For example, millennials’ household savings in retirement accounts increased from $9,000 in 2007 to $36,000 in 2017, Generation X household savings almost doubled from $32,000 to $71,000 and baby boomers more than doubled their savings, from $75,000 to $157,000, according to the study.
In addition, employee plan participation rates are holding steady, with about 8 in 10 eligible workers participating in retirement plans. They saved 9% of pay in 2017, versus 8% a decade earlier, the survey found.
Amidst plentiful signs of recovery, there remain indications that many workers are still refraining from planning as much as they need to for retirement and are also withdrawing some money from retirement accounts, according to the findings of the survey, which focuses on companies with 10 or more employees.
Workers’ confidence that they will be able to retire with a “comfortable lifestyle” has “stalled since 2014,” when it peaked at 64%, the Transamerica Center wrote in its report. In 2017, 61% of workers were confident in a comfortable retirement.
A little more than half of workers surveyed had a retirement strategy in 2007, but that rose to 61% in 2017, according to the survey. However, only 15% of workers have an actual written retirement strategy, the report stated.
The results of the study also revealed that retirement plan “leakage,” with workers taking out loans as well as making early withdrawals from accounts, is a big issue. Almost one-third of workers took money from their 401(k)s, IRAs or other retirement accounts by 2017, the report showed.
The survey also suggested that many workers are still ball-parking what their retirement needs will actually be.
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