Employee Benefit Views

Workers willing to trade PTO, promotions for guaranteed retirement income

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Posted November 19, 2012 by By Kelley M. Butler at 02:18PM. Comments (4)
What would it take for you to trade current riches for future guarantees? I don’t often think in hypothetical terms, but when I consider those kinds of trades, it’s usually in terms of what I’d give up now to know for certain that my kids would grow up happy, secure and successful — or other future outcomes that largely are out of my control. 
When I read results from Towers Watson’s recent Global Workforce Study that shows almost half of U.S. workers (49%) are willing to trade paid time off and future career advancement opportunities for guaranteed retirement benefits, I wondered if maybe they felt the same way: Do employees think a secure retirement largely is out of their control? 
Perhaps. 
According to TW, less than half of employees (46%) are comfortable they will be able to manage their financial resources to provide for their retirement needs; only a third (34%) feel comfortable managing their health care needs in retirement. Further, while 45% feel confident they have enough financial resources to live comfortably 15 years into retirement, only 29% feel the same way 25 years into retirement.
That’s in line with findings from the 2012 Retirement Confidence Survey that show just 14% of respondents are very confident they’ll be able to finance a secure retirement, an all-time low in the 20 years the Employee Benefit Research Institute has been conducting the survey.
Still, new numbers from Fidelity show that 401(k) balances—obviously the primary retirement-savings vehicle—are at an all-time high. 
EBN (@EBNmagazine) asked recently on twitter: How can both things be true? How can retirement savings be at an all-time high, but confidence at an all-time low?
“My guess: Incredible stress/paranoia about not having enough money [is] fueling increased boomer savings,” tweeted Suzanne Woolley via @WealthWatch.
What’s your theory on why employees are saving more, but still are more fearful — so much so that they’re willing to trade career advancement for guaranteed income? Share your thoughts in the comments.  What would it take for you to trade current riches for future guarantees? I don’t often think in hypothetical terms, but when I consider those kinds of trades, it’s usually in terms of what I’d give up now to know for certain that my kids would grow up happy, secure and successful — or other future outcomes that largely are out of my control. 

 

When I read results from Towers Watson’s recent Global Workforce Study that shows almost half of U.S. workers (49%) are willing to trade paid time off and future career advancement opportunities for guaranteed retirement benefits, I wondered if maybe they felt the same way: Do employees think a secure retirement largely is out of their control? 

Perhaps. 

According to TW, less than half of employees (46%) are comfortable they will be able to manage their financial resources to provide for their retirement needs; only a third (34%) feel comfortable managing their health care needs in retirement. Further, while 45% feel confident they have enough financial resources to live comfortably 15 years into retirement, only 29% feel the same way 25 years into retirement.

That’s in line with findings from the 2012 Retirement Confidence Survey that show just 14% of respondents are very confident they’ll be able to finance a secure retirement, an all-time low in the 20 years the Employee Benefit Research Institute has been conducting the survey.

Still, new numbers from Fidelity show that 401(k) balances — obviously the primary retirement-savings vehicle — are at an all-time high. 

EBN (@EBNmagazine) asked recently on twitter: How can both things be true? How can retirement savings be at an all-time high, but confidence at an all-time low?

“My guess: Incredible stress/paranoia about not having enough money [is] fueling increased boomer savings,” tweeted Suzanne Woolley via @WealthWatch.

What’s your theory on why employees are saving more, but still are more fearful — so much so that they’re willing to trade career advancement for guaranteed income? Share your thoughts in the comments.  

 

 

4 Comments

Posted by: Catherine C | November 26, 2012 8:14 AM

It's interesting to note that, in the days when the stock market was flush (perhaps too flush), employees were eager to invest their funds themselves via 401k and similar defined contribution plans. Some even wanted to get rid of DB plans such as social security anyway. Now that the economy's not doing so well, all of a sudden people are concerned and wanting their defined benefit plans back -- or some other guarantee of income. Funny how the pendulum swings, doesn't it?

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Posted by: Joyce T | November 22, 2012 7:21 AM

I am wondering how many future retirees have a financial plan in place,know their FIN number and whether they realize that with longevity expanding, men are expected to see their 88th birthday and women are expected to experience their 92nd birthday? How have they protected themselves, their spouses and families? Are they entering retirement debt free or are they staring at a 30 year mortgage? When will they be financially independent? What's the plan?

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Posted by: KIMBERLY S | November 21, 2012 2:49 PM

Those of us who first became aware of financial matters back in the days when you could count on the stock market, the value of your house and your salary going up each year have gotten a rude awakening in recent years. Sadly, it comes just as we are starting to face the reality of retirement. As a result, many of us are simultaneously increasing our savings and feeling insecure and stressed.

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Posted by: Pam H | November 21, 2012 2:00 PM

I agree with Suzanne Wooley. I see the stress being due to salaries and wages failing to keep up with inflation. Leaving food and fuel out of the inflation equation makes no sense as these are the two highest expenses for low income retirees. In my organization salaries have increased 25% in the same amount of time that home heating fuel has increased by 400%. During the same time period, interest on bank CDs and savings accounts, where many retirees keep enough money for current needs, has dropped to near 0%.

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