Time to Retire? Not So Fast, Say Many Americans
A new study on retirement confidence found that many Americans are thinking of delaying retirement because of inadequate savings and preparation. How can employers help alleviate retirement woes?
Americans are generally not optimistic about their retirement prospects, according to the 2013 Retirement Confidence Survey conducted by the Employee Benefit Research Institute.
Record low confidence levels about having enough money for a comfortable retirement reported in 2011 are unchanged this year, and the percentage of Americans saving for retirement continues to decline. Twenty-eight percent of the 1,254 individuals surveyed are not at all confident and 21 percent are not too confident about having adequate savings for a comfy retirement.
The study attributes this pessimism, which comes despite a rebound in the economy, to a realization by some workers of just how much they need to save in order to stop working. Other financial concerns, such as job uncertainty, cost-of-living expenses, and debt, are also getting in the way of retirement confidence.
The study found that only 46 percent of workers reported that they and/or their spouse have calculated how much they need to save before riding off into the proverbial sunset, and 36 percent said they will have to delay retirement till after age 65.
Having employees who are uncertain about their financial future has potential consequences for employers in the form of decreased worker productivity and engagement.
“When employees feel financially secure, they have less worry, less stress, less anxiety, so they can focus on their job and what the mission of that organization is instead of worrying about money and ‘Am I going to have enough money to live on?’ ‘Am I going to have enough money for an enjoyable retirement?’” said Luke Vandermillen, vice president of retirement and investor services at The Principal Financial Group.
Luckily, retirement preparation is a place where employers can step in and help, Vandermillen said.
“Employers can go a long way to help employees be more financially fit by designing a retirement program that really makes the savings decisions and gets people on the right path as efficiently and effectively as possible,” he said.
He also advises employers to think about how they advertise their retirement plans to their employees.
“The best plans that are out there have a really thoughtful communication plan,” he said. “They use all the channels available—in person, website, email, text messaging—so they’re reinforcing the benefits of the plan using a lot of different communication modes.”