Seventy-one percent of employees report that their workplace savings plans will be their first- or second-largest source of retirement income, according to benefits provider Bank of America Merrill Lynch's 2013 Workplace Benefits Report.
The survey was conducted March 6-17, 2013, with 1,014 employees responding from U.S. companies of all sizes.
401(k) Savings
Two-thirds (66 percent) of employees said they contribute 5 percent or more of their salary to a 401(k) plan, the survey showed.
Among pre-retirees less than 10 years away from their planned
retirement, more than half (56 percent) contributed at least 10 percent
of their salary to their 401(k), and 29 percent contributed 15 percent
or more.
Salary-deferral rates indicate that a majority of younger
workers may be comfortable with an automatic deferral of 5 percent or
higher. Among �early starters� (those under age 30 putting savings into a
401(k) plan), 55 percent contributed 5 percent or more of their salary,
and only 8 percent of these younger workers had a contribution rate of
less than 3 percent.
Health Savings
The rising cost of health care remains a top concern for
employees. Eight out of 10 indicated they have experienced higher health
care costs during the past two years�among whom more than half (56
percent) are saving less for retirement as a result.
Seventy-six percent of employees said their company now offers a
health savings account (HSA) option; 38 percent participated in this
tax-advantaged savings vehicle.
HSA participation increases to 50 percent among pre-retirees;
however, the survey revealed that younger workers (35 percent) are also
using this vehicle to start saving early for current and future medical
expenses. Nearly half of all respondents (47 percent) who contributed to
an HSA or flexible spending account (FSA) said they began doing so or
increased their contributions as a result of rising health care costs.
According to consulting firm Devenir, nationwide assets in HSAs
grew to an estimated $15.5 billion as of the end of 2012 and are
projected to reach $26 billion by 2015.
Financial Advice
When asked what financial matters they need the most help with,
59 percent of employees mentioned advice and guidance on saving for
retirement, followed by managing debt, budgeting and planning for health
care costs. A majority (58 percent) are seeking advice on all aspects
of their financial life�including two-thirds of female employees (66
percent) and half of male employees (49 percent).
Respondents said the financial-advice resources and tools they
would most like their employer to provide are access to a one-on-one
relationship with a financial professional (51 percent), followed by
online tools (46 percent), financial seminars relevant to their life
stage and personal situation (39 percent), and relevant research or
literature to help them make investment decisions (38 percent).
Lack of Confidence
Two-thirds (66 percent) of employees indicated that they have
increased their focus on retirement goals in the past five years.
However, most workers (85 percent) believe that they are not saving
enough, and 60 percent believe it will be very difficult to save enough
to support their standard of living in retirement.
This lack of confidence may be one of the reasons why 78
percent saw themselves working into their late 60s or 70s, up from 72
percent one year earlier.
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