The annual Mercer Workplace Survey of retirement plan participants who also receive health benefits at work found that while participants in general are more optimistic about the economy, they are planning to save slightly less over the next 12 months, and those over the age of 50 have lowered their expected savings amounts by about 18 percent.
“What we see in the attitudes of retirement plan participants is that they are not feeling the rewards of an improving economy in their own personal situation and therefore seem hesitant or feel unable to give up access to immediate cash in order to save for the future,” said Dave Tolve, defined contribution business leader for Mercer’s administration business. “Participants are worried about paying their future bills and are planning on working longer.”
Seventy-seven percent of workers said they plan to retire at age 65 or after, up from 71 percent in 2012.
According to the consulting firm, since 2007, saving for health care expenses in retirement has doubled as a major savings goal, up from 17 percent to 34 percent in its latest survey. And only 35 percent of respondents believe they’ll have enough money to pay for health care in retirement.
Among participants 50 to 64, the survey found 45 percent are now focused on saving for health care expenses in retirement, a 13-point increase since last year and nearly double the level of six years ago.
“The worries about health care in retirement just exemplify the contradictions we see across this year’s survey results,” said Tolve. “Most are worried about health care in retirement, yet most think they won’t have enough money to pay for it. The logical conclusion would be to see an increase in savings to tackle this expected problem, but our survey shows this is not the case.”
Mercer encourages plan sponsors to take significant steps to improve the retirement saving abilities and outlook of their participants by:
• Educating participants about the value of tax-advantaged retirement savings versus other savings vehicles.
• Demonstrating how saving more today can have an enormous impact in meeting anticipated costs of tomorrow, even for those over age 50.
• Provide easy-to-use online tools and resources to influence participants in a way that is meaningful and relevant to them.
The online survey was completed by 1,506 active 401(k) participants in June of this year.