The survey found that the percentage of older workers (ages 50 to 64) who are very confident about having enough resources to live comfortably five years into retirement rebounded from 44% in March 2009 to 50% this year. In 2007, prior to the financial crisis, 63% of older workers were very confident. The survey also noted the percentage of workers who are very confident they will have enough resources to live comfortably throughout retirement drops sharply, with only 9% believing their assets will last through 25 years of retirement, a very slight improvement since last year.
“Despite some signs of an economic recovery, many employees remain apprehensive about the future of their retirement,” said Kevin Wagner, a senior retirement consultant at Towers Watson. “The financial crisis hit employees hard, and eroded both their savings and confidence in being able to retire comfortably. And while employees’ personal finances may be recovering, rebuilding their confidence to pre-financial crisis levels may take more than just an economic recovery.”
The survey also found that employees with DB plans have considerably more confidence in their retirement resources than those with only a defined contribution (DC) plan, such as a 401(k) plan. More than half (52%) of workers with DB plans are somewhat or very confident of having enough resources to live comfortably 25 years into retirement, compared to only one-third (34%) of older workers with DC plans.
Younger workers concerned about future of defined benefits
Compared to 2009, fewer older workers are now concerned about reduced or eliminated benefits in their DB plans or about their employer’s ability to pay some or all benefits they’ve already earned. Younger workers, however, are growing increasingly concerned about their DB plans.
According to the survey, the percentage of older workers who are concerned that their employer will reduce the benefits they earn in the future declined from 44% in 2009 to 39% this year, while the percentage concerned their employer will eliminate benefits they earn in the future dropped from 38% to 30%. Among younger workers (under age 40), however, more than two-thirds (68%) are concerned their employer will reduce future benefits, an increase from 61% in 2009, while the percentage concerned their employer will eliminate benefits increased sharply, from 42% in 2009 to 59% this year.
“Helping to provide a secure retirement for both younger and older workers remains a major issue for employers,” said David Speier, a senior retirement consultant at Towers Watson. “Although worker confidence levels have begun to rebound and the economy is showing signs of recovery, employers still face challenges in addressing their workers’ overall concerns about having enough resources for a comfortable retirement.”
Other findings include:
- More than half (55%) of all respondents said they had seen significant declines in their retirement savings over the last two years, a slight improvement from 60% in March 2009.
- The percentage of employees who are content with their financial situation today has increased slightly - from 26% in March 2009 to 33% this year.
