Workers who are offered 401(k) plans, or similar employee-funded arrangements, exhibit more proactive retirement savings behaviors, demonstrate higher levels of knowledge about retirement investing, and are more confident in their ability to retire comfortably, according to a new survey.

The survey, by the Transamerica Center for Retirement Studies, polled nearly 3,600 U.S. workers, and found that the availability of a plan is highly correlated to proactive saving behaviors beyond simply providing a vehicle to save.

For example, workers who are offered a plan started saving at a median age of 28 (two years before those without plans)—allowing more time to contribute and potentially grow their savings.

Of those who are offered a plan, more than three out of four (77%) participate in the plan and two-thirds (66%) are saving for retirement outside of the plan provided by their employer. By comparison, only 57% of those not offered a plan are saving outside of work.

Workers offered an employee-funded savings plan also appear to be at a distinct advantage because they are more likely to have a retirement savings strategy; 61% have developed some form of a retirement savings strategy, compared to only 40% of workers without an employee-funded plan. They also demonstrate a better understanding of the fundamentals of retirement investing.

Although retirement confidence is lacking among most workers, the survey found that workers who are offered a 401(k) plan or similar arrangement are more likely to agree that they are building a large enough retirement nest egg (45%), compared to those workers who are not offered a plan (27%).

Significantly more workers without a plan expect to retire after the age of 70 or not at all (47%, versus 36% with a plan). More workers without plans expect to rely on Social Security as their primary source of retirement income (31% versus 20%).

Workers at large companies are more likely to be offered a 401(k) or similar plan (80%) than those of small companies (60%). Fewer than half of the part-time worker respondents (48%) indicated that their company offered them a plan, compared to 82% of full-time workers. Part-time workers at small companies are even worse off: only 33% are offered a plan.

Workers in their 20s (57%) are less likely to be offered a plan than those in their 30s (77%), 40s (76%), 50s (72%), or 60s (66%). Sixty-seven percent of women surveyed indicated that they are offered a plan by their employers, compared to 74 percent of men who were surveyed. Only half of women who work part-time are offered a plan (50%). 

WebCPA is an online publication of SourceMedia.

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