Are you currently working and worried that you may not have enough for retirement when your time comes? If you’ve answered “yes,” then you’re in good company.
According to the most recent Annual Retirement Survey from Transamerica Center, only about 18 percent of the 6,372 workers surveyed noted high confidence that their retirement would be financially secure. Employers seem to agree: Of the 1,825 employers of various sizes studied, only 16 percent responded similarly.
It begs the question: Why is confidence in retirement so low among both employers and employees? It largely stems from cutbacks and retirement restructuring that companies had to make to navigate the murky waters of the great recession from a decade ago. And once you take something away, it’s a lot easier to make the change permanent – even when the outlook improves. Even so, employers don’t have to offer pensions, stock and guarantee annual raises to help their workers prepare for retirement. But there are some simple things that they can do, and these things were largely reflected in Transamerica Center’s retirement study. Here’s a closer look:
Automatic 401K Enrollment
According to the study, more than 80 percent of the workers studied said that they like the idea of having their employer automatically enroll them into a 401K account. Yes, it could be looked at as somewhat of a “mandatory retirement allocation,” but to say that it’s irresponsible for employers to care about their workers’ life after work would be wrong. Yet, only about 20 percent of employers perform this automatic 401K enrollment. According to the study, this is based on the assumption that workers don’t want to think about retirement until they’re a few years away from it – and that, quite frankly, just doesn’t make sense.
Retirement is something that should be planned for from the very beginning of that first, entry-level job. Being that a dwindling number of employers are offering pension plans to supplement retirement savings, the 401K becomes an extremely important means of saving for retirement. In addition to automatically enrolling employees, employers could greatly assist their workforce by offering a company 401K match, retirement counseling and information on other retirement accounts, such as IRAs.
Transitioning into Retirement
One of the other big findings from the Transamerica study is how many workers report a desire to transition into retirement. That is, before calling it quits for good, transition to a part-time role or a full-time position that doesn’t have the demands of their current position. About 70 percent of the companies surveyed stated that they considered themselves aging friendly workplaces. However, the sentiment was shared by only about 55 percent of workers. What’s more is that the survey discovered that only about one-fifth of the companies surveyed had some sort of a phased-out retirement option. That’s quite the disconnect between companies believing that they are aging friendly, and those that have actionable plans to actually carry out such.
When you think about it, an aging friendly retirement is a win for both the employer and the employee. The employee gets to gradually phase themselves out of the workforce by taking on positions with less responsibility or less of a time commitment. The employer, on the other hand, is permitted to hire a successor to the position being vacated, and have the individual still there to help with the transition and offer any other guidance. It makes sense. So why aren’t more employers offering these types of programs?
If you take away anything from the Transamerica Center report, it’s that there’s a significant disconnect between employers and employees when it comes to retirement. Employers seem to be content leaving retirement all up to the employee, while employees want more assistance, even if it’s something as simple as automatic 401K enrollment and a phased out retirement program in the workplace. So if you’re a president or CEO that’s reading this, take note. And if you’re an employee that’s reading this, now’s as good of a time as ever to assess where your retirement savings stand and consider taking other measures to meet your goals for when you exit the workforce.