The Transamerica Center for Retirement Studies’ 11th Annual Retirement Survey finds most working Americans continue to prioritize paying off debt and covering basic living expenses over saving for retirement. Almost two in five working Americans are saving less than before the recession.
According to the survey report, the average contribution rate has steadily declined in recent years, along with the American workers’ confidence in a comfortable retirement. More than 10% of American workers either decreased their contribution rate or stopped contributing altogether during the last 12 months.
More than 40% of respondents said they expect their employee-funded plans to be their main source of retirement income, while 23% expect to rely on Social Security. However, more than two in three Americans think they could work until age 65 and still not save enough for retirement. Outliving their money and not being able to meet basic financial needs continue to be key fears among workers regarding retirement.
Survey respondents rated employee-funded plans as second in importance only to health insurance.The survey also found workers who have retirement benefits offered to them are more involved with their retirement savings and planning, start saving for retirement at an earlier age, and have a greater understanding of asset allocation principles. Two in three American workers are currently offered employee-funded retirement plans, and three in four workers who are offered employee-funded plans participate.
Workers Could Use More Help Saving for Retirement
The Transamerica Center for Retirement Studies’ 11th Annual Retirement Survey suggests opportunities exist to improve retirement savings for the American worker.
Two in three workers admit they do not know as much as they should about retirement investing. More than half would like more information and advice from their employers on how to reach retirement goals.
According to the survey report, only about one quarter of workers report understanding asset allocation principles, and more than one in ten do not know how their money is invested. About one quarter are aware of plan fees.
Nearly one half of workers have a retirement strategy, and fewer than one in ten actually have a plan written down. Half of workers continue to guess at the amount of money they will actually need in retirement.
The survey also found workers react positively to the prospect of financial incentives to learn about retirement. One in three say a tax break or savings incentive would motivate them to learn more.