More than half (51 percent) of Americans recently surveyed by Transamerica reported that they believe they are building a large enough retirement nest egg, and 62 percent said that they are at least “somewhat confident” they will be able to achieve a comfortable lifestyle in old age. Both of those figures are improvements from the 2015 survey but many Americans still have concerns about how financially well-off they will be in retirement. Forty-seven percent of surveyed workers, for instance, said that they are worried their Social Security benefits will be reduced or cease to exist at some point in the future, and 45 percent reported concerns about potential health declines that will require long-term care. The biggest fear for respondents, though, is outliving their savings and investments (51 percent). That is not too surprising since surveyed workers anticipate living to a median age of 86, and nearly a sixth of respondents expect to become centenarians. Even the more conservative estimates for life expectancy would still imply decades of retirement that need to be funded.
Understandably, workers estimate they will need to have saved around $500,000 (median) prior to retirement in order to achieve old-age financial security, although more than one in three respondents believe that they will need at least $1 million for similar well-being. Fortunately, many Americans are taking the right steps to help ensure a comfortable lifestyle in retirement. For example, most surveyed workers began saving for retirement before their 30th birthday, and more than three-quarters of respondents with access to an employer-sponsored savings plan said that they are participating. The latter can be especially beneficial because 401(k)s and similar plans generally provide participants with numerous tax advantages, and many employers will even augment a worker’s rate of saving through matching contributions. Moreover, 88 percent of survey respondents described their employer-sponsored retirement plan as being “very” or “somewhat” important, and 78 percent said that the savings programs offered by prospective employers play a significant role in their job search decision. Half of worker respondents even said that they would be willing to accept a job offer that barely meets their minimum salary requirement but still provides excellent retirement benefits.
Only 23 percent of surveyed workers said that their employer does not currently offer access to a 401(k) or similar plan but within this group, 60 percent reported that they would be likely to switch jobs for a comparable position that does include some sort of retirement benefit. As for respondents who do have access to a savings plan through their employer, most workers (72 percent) said that they are “strongly” or “somewhat” satisfied with their retirement benefits, although more than half (54 percent) of all surveyed employees said they would still switch jobs for access to a better plan. One clear reason why Americans place such a high value on their workplace-provided savings vehicles is because 78 percent of surveyed employees said that they expect these self-funded plans to be a major source of their retirement income, and more than a third (36 percent) even anticipate that these savings tools will be their primary source of income during retirement. Encouragingly, almost one in three workers who are participating in a 401(k) or similar plan said that they have increased their contribution rate at least once within the past 12 months.
Sources: Transamerica Center for Retirement StudiesPost author: Charles Couch