Retirement security in a post-pension era
March 18, 2013
Article courtesy of SBAM Approved Partner ASE
By Kevin Marrs
A recent nationwide opinion survey suggests that employees are “highly anxious” about their retirement prospects, and overwhelmingly support action by Congress to create a new privately run pension plan. Despite improvements in the stock market, the National Institute on Retirement Security found that more than half of Americans are “very concerned” about their retirement, a slight increase from data collected in 2011.
A likely cause for this concern is the market volatility many investors experienced during and since the Great Recession. Many people now realize that with 401(k)-style retirement programs, timing in retirement is everything. As a result, more and more future retirees long for the pension plans of their parents and grandparents.
Other key findings from the survey:
- Eighty-two percent agree that it is getting harder to prepare for retirement.
- Most respondents (67%) disagreed that government should cut spending to the detriment of Social Security for current retirees.
- More than 90% would favor a new pension plan that is available to all Americans, is portable from job to job, and provides a monthly check throughout retirement for those who contribute.
- Millennials (those born after 1976) appear to be the most concerned. Ninety percent of respondents from that segment of the population argue that lawmakers need to make retirement a higher priority. Ninety-five percent agreed that the current retirement system is under stress.
- Eighty-seven percent of participants say that the growing number of Baby Boomers retiring without adequate savings is straining families and the economy.
Implications for employers
The fact that employees are concerned about their retirement should not come as a shock to anyone, especially those in the HR profession. And, while the average HR professional cannot impact what Congress does, there are some important ways that they can alleviate some of the stress their employees feel about their retirement prospects.
For example, even a modicum of financial education will help make employees better stewards of their retirement plans. Employers should also make an effort to communicate more frequently with employees regarding the specifics of their plans. Lastly, plan participation should be made easy. Automatic enrollment, while controversial, has been shown to boost the savings rates of employees.