Employees are scaling back their expectations and ambitions for life in retirement, as they recognize that they are not saving enough to support the lifestyle they envisioned. This is according to the latest version of the Mercer Workplace Survey™, a national study of employee attitudes and behaviors around their company sponsored benefits plans conducted annually by Mercer HR Services. In response, Mercer HR Services is launching the “Stress Less Retirement Program” to help 401(k) plan participants take immediate steps to get back on track to achieving their retirement goals.
This year’s Mercer Workplace Survey indicates that 401(k) plan participants are becoming increasingly distracted from the process of saving for retirement. While still the number one savings objective overall, retirement is losing ground to other more immediate financial needs including paying down debt, funding a child’s education, and saving for unexpected expenses. The survey shows “saving for retirement” and “just keeping up with my monthly expenses” are virtually tied as participants’ biggest economic worry. Coupled with a less optimistic economic outlook that has taken hold among participants, two of three respondents now acknowledge they are not saving enough for retirement. Yet, by almost the same margin they believe they will have time to “catch up on my 401(k) contributions before I retire.”
“The results of the Mercer Workplace Survey indicate that the participant is more conflicted than ever about saving for tomorrow or paying bills today” says Beth Pasciucco, Director of Marketing, Communications, and Education for Mercer HR Services. “Immediate financial pressures, like paying down credit card debt or simply keeping up with monthly expenses, combined with an uncertain economic outlook, have convinced many that waiting to save for retirement is an acceptable solution. We know it’s not.”
As participants struggle to find the money to save, their confidence in their ability to plan for retirement continues to wane. Just under half are confident they will be ready for retirement financially and only 52% say they know how to calculate how much money they will need in retirement. Behind this eroding confidence may well be uncertainties associated with looming health care expenses. By an overwhelming margin, participants say they are unsure how they will cover health care expenses in retirement or even have an idea of how much health care will cost.
The result of all this uncertainty is a dramatic decline in expectations for quality of life in retirement. Fewer than four in ten expect to live as well or better in retirement, down from 52% in 2004. Similar fall-offs attach to being able to travel in retirement, leaving a legacy or being able to help out family members financially.
A bright spot in this year’s results is that participants are acknowledging they need help and are increasingly reliant on resources provided by their employer as well as the investment company that runs their 401(k) for information about investing for retirement. Other sources declined in importance, including friends and family, their own research or newspapers, magazines or television. This represents an opportunity for providers to reinforce the basics of retirement planning and to motivate their employees to take proactive steps to achieve their goals for a successful retirement.
To help address this opportunity, Mercer HR Services is launching the “Stress Less Retirement Program” in November This integrated print and online program, includes a month-long educational campaign with daily suggestions for setting retirement savings goals, finding the money, and measuring progress toward those goals. The educational program is available to participants in 401(k) plans administered by Mercer HR Services and to the general public at www.lessretirementstress.com.
According to Pasciucco, “Our experience tells us that a consistent, proactive approach to participant education, with simple, actionable steps will motivate people to make positive retirement saving decisions like ‘saving more” or “diversifying.” Our survey tells us they are listening now so we should take advantage of that and the recent market improvement to continue to communicate the essentials of retirement investing.”
About the Mercer Workplace SurveyTM, Mercer HR Services and Mercer Human Resource Consulting
The Mercer Workplace Survey is a national study of employee attitudes and behaviors around their company sponsored benefits plans conducted annually since 2003 by Mercer HR Services. These findings are based on a national cross-section of 1, 729 active 401(k) participants who are also currently enrolled in their employer’s health plan. Online interviews were conducted in April/May of 2006.
Mercer Human Resource Consulting is a global leader for HR and related financial advice and services, with more than 15,000 employees serving clients in over 180 cities and 40 countries and territories worldwide. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific and London stock exchanges. For more information, visit mercerHR.com.
