Employers love staff members who go above and beyond the call of duty. It's this type of initiative and drive that makes for a successful and productive enterprise.
It turns out, though, that many workers aren't using the same go-getter strategy when it comes to preparing for their retirement, based on the results of a newly released study. However, they just might if all parties have more "skin" in the game.
Approximately half of employees only put enough of their own earnings into their retirement savings plans to trigger the company match, a recent study from worldwide research information LIMRA has found.
Researchers at the Windsor, Connecticut-based insurance industry research company arrived at this finding after analyzing the defined contribution plans of millennials, who today represent the largest generation of full-time workers, supplanting baby boomers, many of whom are now entering retirement or have already left the workforce. Among 18- to 33-year-olds working in both for-profit and nonprofit organizations, roughly 50 percent of workers were only putting enough money into their DC plans for their employer to match what they contributed.
One-third of millennials saving at least 10 percent
"36 percent of millennials are saving at least 10 percent of their income for retirement."
More specifically, among millennial workers in both sectors, approximately 33 percent are saving 10 percent or more of their annual income. This compares with 27 percent of baby boomers saving the same amount and 28 percent of Generation Xers, whose ages range between the mid-to-late 30s and early 50s.
Michael Ericson, analyst for LIMRA's Secure Retirement Institute, indicated that if workplaces match what their employees put in, you can imagine what might happen if employers raise the stakes.
"The study demonstrates the powerful incentive a company match can have on employee behavior," Ericson explained. Institute research shows nearly half of American workers believe they are not saving enough for retirement and 4 in 10 working households have less than $25,000 saved for retirement. Plan providers can help employers increase their employee's savings behavior by recommending a 'stretch' match strategy, which would require an employee to save a higher percentage to attain the full company match."
Though most of the respondents didn't know how they would wind up using the assets accumulated through retirement savings, a fairly significant percentage know how much they'd like to withdraw once the time comes. Approximately 50 percent of pre-retirees indicated they intend to take out 9 percent or more of their assets for every year that they're retired., the LIMRA poll revealed.
Ericson said that because more people are living longer, it's best to withdraw conservatively.
"With longevity at an all-time high, retirement can last more than three decades," Ericson warned. "Understanding how to safely draw down savings becomes critically important for retirees."
Public sector more satisfied with retirement plans offered by employer
With an increasing number of employers offering retirement plans, many businesses are using them as a selling point for recruiting new hires, as well as retaining current staff members. Government workers, it turns out, tend to be more satisfied with their retirement plans than their private sector peers. In a recent poll conducted by Gallup, approximately 8 in 10 public-sector employees said they like the retirement benefits offered at their workplace. Meanwhile right around 55 percent of non-government employees expressed the same positive sentiment
"Pensions aren't as common as they used to be in the private sector."
Justin McCarthy, Gallup analyst, said that the substantial difference in sentiment may be tied to pensions, as government workers are more likely to be offered them.
"Many government workers likely have pension plans, something increasingly rare in the private sector," McCarthy said. "Government workers may also get guaranteed vacation of two to four weeks – or summers off for public school teachers – and likely all federal holidays."
At the same time, McCarthy hastened to mention that government employees earn approximately 33 percent less than private sector employees do in terms of salary, based on a study done in 2014 by a federal advisory committee.
With financial resources tied up in salary and infrastructure improvements, retirement plans can often receive the short end of the stick. Yet through the power of Leveraged Planning® Solutions, employers can sweeten their company's benefits package. For more information, please contact your local Global Financial Distributors advisor and find out how to put borrowed funds to work.