One of the most talked about HR trends of 2018 is financial wellness. More and more employers are stepping up to help their employees get on the right track to becoming more financially stable. However, a new CareerBuilder survey highlights employees’ concerns over whether or not they have enough saved for retirement, hindering plans to retire at the typical age of 65.
Though the economy is improving, many U.S. workers are still pumping the brakes on their retirement plans. According to a recent CareerBuilder survey, 53% of workers aged 60+ say they are postponing retirement, with 57% of men putting retirement on hold compared to 48% of women. Four in 10 workers (40%) don’t think they’ll be able to retire until 70 or older.
This survey was conducted online by The Harris Poll from November 28, 2017 and December 20, 2017, and included a representative sample of 809 full-time workers across industries and company sizes in the U.S. private sector.
“Postponing retirement will make an impact across all of our country’s workforce, along with retirement policy and financial and health care planning,” said Rosemary Haefner, chief human resources officer at CareerBuilder—in a press release. “With workers staying in their jobs longer, employers are adjusting hiring needs, but also reaping the benefits of the extra skills and mentoring abilities of mature employees.”
Postponing Because of Uncertainty
Are workers putting retirement plans on hold because they are unsure of how much to save? Approximately a quarter (24%) do not know how much they will need to save for retirement. Women are much more likely to be unsure of how much to save than men—31% to 17%, respectively.
When asked how much money they think they’ll need to save in order to retire, workers said:
- Less than $500,000: 20%
- $500,000 to less than $1 million: 31%
- $1 million to less than $2 million: 14%
- $2 million to less than $3 million: 5%
- $3 million or more: 7%
When asked if they’re currently contributing to retirement accounts, roughly one in four workers 55+ (23%) said they do not participate in a 401(k), IRA, or other retirement plan, a rate even higher in younger adults ages 18 to 34 (40%). Sixty-seven percent of workers in the South and 69% in the Midwest contribute to retirement accounts, compared to 73% in the Northeast and 71% in the West.
Ways Employers Are Trying to Help
A recent Willis Towers Watson survey uncovered the different ways employers are trying to help their employees save for retirement. The survey found more employers are adding “automatic” and Roth design features to their 401(k) plans, boosting employer contributions, streamlining investment choices, and improving fee transparency.
The survey found more companies are adopting automatic features to their DC plans. Nearly three in four respondents (73%) now automatically enroll new participants, compared with 68% in 2014 and 52% in 2009. Additionally, 60% of respondents provide an auto-escalation feature, up from 54% in 2014. These automatic features can significantly improve an employee’s retirement readiness.
Other improvements plan sponsors reported making to their DC plans include:
- Adding Roth features: Seven in 10 respondents offer Roth features within their 401(k) plans, an increase from 54% in 2014 and 46% in 2012.
- Increasing employer contributions: One in four employers increased its plan contributions over the past 5 years. Of those that increased contributions, 60% did so by increasing the employer match; 51% by encouraging employee savings and employee engagement, and 44% by offsetting benefit changes in their defined benefit program.
- Streamlining investment options: More than four in 10 respondents (42%) reduced the number of investment options they offer to plan participants over the past 3 years, and another 41% plan to do so by 2020.
- Offering target-date funds (TDFs) as predominant default option: 93% of respondents use TDFs as the qualified default investment alternative (QDIA), an increase from 86% in 2014 and 64% in 2009.
- Adding health savings accounts (HSAs): 80% of employers offer HSAs; 12% are planning or considering adding them by next year. HSAs, with tax-free contributions, investment earnings, and distributions, have become a popular retirement savings tool.
- Increasing fee transparency: 41% charge a fixed-dollar amount per participant for recordkeeping fees, an increase from 32% in 2014.
- Expanding financial well-being communication: 78% expect to increase efforts to educate employees on retirement planning issues. Of this group, 64% plan to offer guidance on how to draw down funds after retirement.