Not a Member?  Become One Today!

Most Dissatisfied with Their Financial Situation
 

By SHRM Online staff  1/26/2012

Many employees remain concerned about their ability to retire and are taking steps to get their financial houses in order, according to survey findings released in January 2012 by consultancy Towers Watson.

The Towers Watson Retirement Attitudes Survey was conducted in June and July 2011 and includes responses from 9,218 full-time U.S. employees at nongovernment organizations with 1,000 or more employees.

The percentage of workers who said they were very or somewhat confident about having enough resources to live comfortably 15 years into retirement increased from 62 percent in 2010 to 68 percent in 2011, the survey found. Workers, however, were less confident about living comfortably throughout retirement. Less than half (47 percent) of respondents said they were very or somewhat confident they will have enough resources to last 25 years into retirement. This compares with 40 percent who said they were very or somewhat confident in 2010.

Fewer employees experienced significant declines in their pension and retirement savings—47 percent in 2011 vs. 55 percent in 2010 and 60 percent in 2009. And satisfaction with their household finances continued to improve, jumping from 33 percent in 2010 to 41 percent in 2011. Despite this upturn, three in five workers (59 percent) remain generally unsatisfied with their financial situation.

“As the economy shows periods of stable ground, employees are slowly beginning to be more optimistic about retirement,” said Kevin Wagner, a senior retirement consultant at Towers Watson. “However, the financial crisis was jolting to American workers. As a result, many employees are more financially conservative today and have a renewed interest in improving their financial decisions and planning and saving for retirement.”

The survey noted that after two years of cutting back on daily spending, paying off debt and saving more for retirement, some respondents plan to take additional measures in 2012 to get their financial houses in order. These steps include further cost-cutting and a sharpened focus on retirement security.

Planned Action by Employees for 2012

% Considering

Review how much needed to save for retirement.

37%

Increase monthly savings.

33%

Review financial situation.

30%

Obtain professional advice.

29%

Reduce daily spending.

28%

Pay off debt.

25%

Defer major expenditure.

23%

Adopt less risky investment strategy.

17%

DB Plan Participants More Confident

According to the survey, the percentage of workers with defined benefit (DB) pension plans who were satisfied with their household finances jumped sharply since 2009, from 29 percent to 49 percent. DB participants were more than twice as likely to feel “very confident” about the first 15 years of retirement and 2.5 times as likely to contemplate a 25-year retirement with confidence compared with workers with only a 401(k) plan.

Young Workers Need to Save More

A larger percentage of young workers (under age 40) were satisfied with their household finances in 2011 (47 percent) vs. 2009 (28 percent). However, nearly two in three (66 percent) of young workers said they will need to save much more in the future to achieve a comfortable level of retirement income. Moreover, the percentage of young workers who reviewed their retirement plans carefully increased by more than 40 percent from 2010 to 2011.

“While the depressed economy may have triggered some of these prudent behaviors, increased attention to retirement planning, especially for younger workers, can be a helpful step for employees to save for a secure retirement,” said Bill Daniels, a senior retirement consultant at Towers Watson. “This is an opportunity for employees to make positive strides for their future. It can also be an opportunity for employers to take advantage of emerging education and planning technologies to drive up appreciation of benefits programs.”

Additional Highlights

Other significant findings include:

Nearly four in 10 respondents (39 percent) plan to delay retirement, with older employees (46 percent) and those in poor health (42 percent) most likely to retire later. The majority of workers delaying retirement (60 percent) expect to work at least an additional three years.

Nearly three-fourths of respondents (74 percent) use their employer or plan administrator’s website for educational material to help prepare for retirement. Almost two in three (65 percent) use online retirement tools and educational material mailed to their home.

Related Articles:

Older Americans Expect to Work Longer; Many Expect Never to Retire, SHRM Online Benefits Discipline, December 2011

Financial Literacy and Savings Behavior Vary Widely Among States, SHRM Online Benefits Discipline, November 2011

Viewpoint: Six Steps to Put Employees on the Retirement Readiness Path, SHRM Online Benefits Discipline, November 2011

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Retirement Plans Resource Page

Sign up for SHRM’s free Compensation & Benefits e-newsletter

Copyright Image Obtain reuse/copying permission