Participants, Non-Participants Have Different Retirement Realities

Workers offered 401(k) plans exhibit more proactive retirement savings behaviors, demonstrate higher levels of knowledge about retirement investing, and are more confident in their ability to retire comfortably, according to new research from the non-profit Transamerica Center for Retirement Studies.

The results of the 11th Annual Transamerica Retirement Survey—conducted among nearly 3,600 American workers— the availability of a plan is highly correlated to proactive saving behaviors beyond simply providing a vehicle to save.

For example, workers who are offered a plan started saving at a median age of 28, while those without started saving at age 30. Of workers who are offered a plan, two-thirds (66%) are saving for retirement outside of the plan provided by their employer. By comparison, only 57% of those not offered a plan are saving outside of work.

Workers offered an employee-funded savings plan, 77% of whom participate in the plan, are more likely to have a retirement savings strategy; 60% have developed some form of a retirement savings strategy, compared to only 40% of workers without an employee-funded plan.  However, speaking on a media call, Catherine Collinson, president of the Transamerica Center for Retirement Studies, pointed out there is room for improvement, as only 9% of those offered an employee-funded savings plan and 5% of those without such access have a written plan.

Retirement Plan Coverage

The majority of workers both with a plan (95%) and without a plan (79%) consider it to be personally important. However, only 71% of all workers reported being offered such a plan, and the data revealed that certain demographic segments are less likely than others to have access, including:

  • Small-business workers: Workers of large companies are more likely to be offered a 401(k) or similar plan (80%) than those of small companies (60%).  In recent years, coverage has seemed to plateau at small businesses, Collinson noted.
  • Part-time workers: Fewer than half of the part-time worker respondents (48%) indicated that their company offered them a plan, compared to 82% of full-time workers. Part-time workers at small companies are even worse off: only 33% are offered a plan.
  • Younger workers: Workers in their twenties (57%) are less likely to be offered a plan than those in their 30s (77%), 40s (76%), 50s (72%), or 60s (66%).
  • Women: 67% of women surveyed indicated that they are offered a plan by their employers, compared to 74% of men who were surveyed. Only half of women who work part-time are offered a plan (50%).

Tale of Two Retirements

Ultimately, the disparity in proactive savings behaviors and levels of retirement knowledge between workers who have access to a plan versus those who do not may lead them to drastically different realities when they reach retirement age, Collinson said. For example, significantly more workers without a plan expect to retire after the age of 70 or not at all (47%, versus 36% with a plan).

Furthermore, although retirement confidence is lacking among most workers, the survey found that workers who are offered a 401(k) plan or similar arrangement are more likely to agree that they are building a large enough retirement nest egg (45%), compared to those workers who are not offered a plan (27%).

When it comes to income sources in retirement, more workers without plans expect to rely on Social Security as their primary source of retirement income (31% versus 20%). More than half (53%) of those with employer-sponsored plans expect their 401(k), 403(b), or individual retirement account (IRA) to be the primary source of income in retirement, while 22% of those without an employer-sponsored plan expect to use one of those plan types to fund retirement.

The survey was conducted online within the U.S. by Harris Interactive on behalf of Transamerica Center for Retirement Studies between December 3, 2009 and January 18, 2010 among 3,598 full-time and part-time workers in for profit companies of employer size of 10 or more, age 18 or older.

For the full survey results, visit