When asked about the desire for a guaranteed source of income during retirement, 82% of employees surveyed would be willing to give up 5% of their salary if it meant having reliable income to help them live comfortably during their later years, according to Bank of America Merrill Lynch’s 2012 Workplace Benefits Report. Forty-two percent said they would be willing to give up 10% or more of their salary.
Kevin Crain, head of institutional retirement and benefit services for Bank of America Merrill Lynch, told PLANADVISER he found these survey results “very surprising, but in a very good way.”
“I think if the employees are pushing for [retirement income], you will see a push on employers,” he said. “Plan sponsors are really going to jump to the cause. Employees are getting very aggressive in their attitudes about this.”
Survey results indicate that employees are also focusing on health care expenses in retirement.The use of Health Savings Account (HSA) by employers and employees is growing rapidly. More than half (57%) of employees view HSAs as important to their financial security.
According to a health insurance industry trade association, the number of people enrolled in HSAs and high-deductible health plans has more than doubled since 2008, with an estimated 13.5 million people using them today. Bank of America Merrill Lynch’s survey found that 30% of companies now offer an HSA option to their employees, among whom 35% participate in this tax-advantaged savings vehicle.
“Our research finds that most employees are realistic in their view that health care costs—throughout what for many will be a longer life than previous generations—will be one of their most significant expenses later in life,” said Bob Kaiser, head of health savings for Bank of America Merrill Lynch.
Crain said he thinks the increased interest in how people can save for health care will be a “very strong positive continuum.”
The survey also found that nearly 70% of employers feel some sense of responsibility for helping employees secure the assets needed to sustain them later in life, but just 39% offer their retiring employees guidance on what to do with their 401(k) assets, and only 20% educate employees on issues such as preparing for future health care costs or understanding when to take Social Security as they approach traditional retirement age.
When asked what would encourage them to contribute more to their 401(k) accounts, employees cited an increase in company match (89%); more affordable health care benefits (73%); greater access to education and advice about saving and investing in the plan (53%); and a higher maximum contribution limit (46%).
To help employees with their savings and investment goals, some companies provide advice programs. The study found that 56% of companies now offer access to professional financial advice in the workplace. Among employees without access to professional advice, half would like their employer to offer it.
Employees are most seeking advice for investing in their 401(k) plan (45%); preparing for retirement (44%); budgeting for current (40%) and future (33%) health care expenses; and maximizing their company stock and equity plans (42%).
Boston Research Group interviewed a national sample of 1,000 employers through a phone survey and 1,000 employees through an Internet survey from January 2012 through March 2012 on behalf of Bank of America Merrill Lynch.
More information about the survey is available here.