Employees hunger for support when it comes to saving more for retirement, according to a new survey of U.S. workplace retirement plan participants by State Street Global Advisors. They also want their employer to automatically increase their savings rate.
State Street’s DC Investor Survey, conducted jointly with Boston Research Group, polled 1,000 employees who participate in a 401(k), 403(b), 457 or profit sharing plan. It found that 74 percent of employees surveyed want clear examples that will show them how their savings will pay off in the future. Seventy-one percent want employers to increase their savings rate by 1 percent automatically each year; and 62 percent of employees 25 and younger said they want their employers to show them how to spend less so they can save more, compared to 53 percent of all employees surveyed.
"Our study leaves no doubt that employees want help in saving more and they want it to be as easy as possible," said Fredrik Axsater, managing director and head of global Defined Contribution for State Street Global Advisors. "Many of our plan sponsor clients have expressed some hesitancy about automatically increasing savings rates for their employees. We hope this survey will help convince employers to prioritize savings adequacy in 2013."
Survey respondents indicated they want advice and guidance from experts when making decisions about their investments and their overall retirement readiness at critical inflection points like enrollment, job transition and exiting their plan at retirement. Axsater highlighted the importance of providing employees with simple, straight-forward tools that will help them determine how much to save and how to invest wisely.
"This is a perfect opportunity for employers to provide worksheets, calculators and other interactive tools to help their employees make good choices and understand the long-term trade-offs in achieving their retirement goals." Axsater continued, "For example, employers can assist employees when they are enrolling in their plan by highlighting the benefits of target date funds and access to online interactive planning tools. In addition, employers can support better decisions made at the time of exit by providing employees with a clear illustration of their options, including the pros and cons."
Eighty-two percent of younger employees, those 25 and under, said they are on track to save enough to meet their retirement goals, while the average of all employees surveyed was only 63 percent. Forty-eight percent of the younger generation also said they had increased their savings outside of the workplace in the last 12 months, while the average for all employees surveyed was only 37 percent.
"The results show that young employees want more engagement, like videos, interactive tutorials, email reminders, savings challenges and buddy systems. They also favor expert advice to help them determine how to invest. We encourage employers to tap their enthusiasm and engagement to help them gear up for a fiscally sound and comfortable future," Axsater continued.
State Street Global Advisors is a global leader in asset management.