U.S. workers are becoming more confident that they will have enough money to retire comfortably, but know they still have work to do, according to a recently released survey from Towers Watson, a global employee-benefits consulting firm. In 2011, 68 percent of survey respondents reported they were very or somewhat confident they will have enough […]
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U.S. workers are becoming more confident that they will have enough money to retire comfortably, but know they still have work to do, according to a recently released survey from Towers Watson, a global employee-benefits consulting firm.
In 2011, 68 percent of survey respondents reported they were very or somewhat confident they will have enough resources to live comfortably 15 years into retirement, up from 62 percent in 2010. The survey found 47 percent of respondents said they were very or somewhat confident about having enough resources to last 25 years into retirement, up from 40 percent in 2010.
Survey data also indicates fewer employees are experiencing significant declines in their pension and retirement savings — 47 percent in 2011, down from 55 percent in 2010. Workers’ satisfaction with their household finances continued to rebound in 2011, rising 8 percent to 41 percent. However, 59 percent of employees remain generally unsatisfied with their financial situation, according to Towers Watson.
“As the economy shows periods of stable ground, employees are slowly beginning to be more optimistic about retirement,” Kevin Wagner, a senior retirement consultant at Towers Watson, said in a Jan. 19 news release. “However, the financial crisis was jolting to American workers. As a result, many employees are more financially conservative today and have a renewed interest in improving their financial decisions and planning and saving for retirement.”
Despite that, 39 percent of surveyed workers said they plan to delay retirement, with older employees (46 percent) and those in poor health (42 percent) most likely to retire later. The survey found 60 percent of employees delaying retirement said they expect to work at least an additional three years.
The survey also notes that after two years of cutting back on daily spending, paying off debt, and saving more for retirement, some respondents indicated they plan to take additional steps this year to get their financial houses in order. These steps include: review the amount they need to save for retirement, increase monthly savings, review their financial situation, obtain professional advice, reduce daily spending, pay off debt, defer major expenditures, and adopt a less risky investment strategy.
Local reaction
Theodore Sarenski, CEO of Blue Ocean Strategic Capital, a Syracuse–based company that provides wealth-advisory services, says that investors are not showing confidence about retirement because they worry about losing money in the stock market.
“People have scaled back on their tolerance of risk, and they are more conscious of risk now than they were a few years ago,” he says.
Sarenski says the market volatility of the past four years has increased doubt.
“There has been a lot of volatility in the stock market in the past four years, along with the uncertainty of not just the stock market, but in government’s ability to meet their obligation,” he says. “That uncertainty is leading some people to feel unstable. That gets them concerned because they are not reaching the goals that they thought they were going to reach.”
More survey findings
Employees’ confidence in retirement also depends on their plan. According to Towers Watson, the percentage of employees with defined benefit (DB) pension plans who are satisfied with their household finances sharply rose from 29 percent to 49 percent in the past two years. DB participants are more than twice as likely to feel “very confident” about the first 15 years of retirement and 2.5 times as likely to feel confident about a 25-year retirement, compared to workers with only a 401(k) plan.
The survey also examined younger workers’ attitudes, finding 47 percent of employees under age 40 reported they were satisfied with their household finances last year, up from 28 percent in 2009. Yet, about two-thirds of these workers said they would need to save much more in the future to retire comfortably. They are taking steps to do it, the survey found. The percentage of young employees who carefully reviewed their retirement plans increased by more than 40 percent between 2010 and 2011.
“While the depressed economy may have triggered some of these prudent behaviors, increased attention to retirement planning, especially for younger workers, can be a helpful step for employees to save for a secure retirement,” Bill Daniels, a senior retirement consultant at Towers Watson, said in the news release.
The Towers Watson Retirement Attitudes Survey was conducted in June-July 2011 and includes responses from 9,218 full-time U.S. employees at non-government organizations.
