U.S. employees’ confidence in their ability to retire comfortably continued to rebound from post-recession lows last year, according to a new survey.
Professional services firm Towers Watson, New York (NYSE, NASDAQ: TW), published this finding its latest Towers Watson Retirement Attitudes Survey. The poll was conducted in June/July 2011 and includes responses from 9,218 full-time U.S. employees at non-government organizations with 1,000 or more employees.
The Towers Watson survey found that the percentage of workers who say they are very or somewhat confident about having enough resources to live comfortably 15 years into retirement increased to 68% last year from 62% in 2010. Workers, however, are less confident about living comfortably throughout retirement.
Less than half (47%) of respondents say they are very or somewhat confident they will have enough resources to last 25 years into retirement. This compares with 40% who said there were very or somewhat confident in 2010.
The survey also found that fewer employees are experiencing significant declines in their pension and retirement savings: 47% in 2011 versus 55% in 2010 and 60% in 2009. Additionally, employee satisfaction with their household finances continued to improve, jumping to 41% in 2011 from 33% in 2010.
Despite this upturn, the survey says, three in five workers (59%) remain generally unsatisfied with their financial situation.
“As the economy shows periods of stable ground, employees are slowly beginning to be more optimistic about retirement,” says Kevin Wagner, a senior retirement consultant at Towers Watson. “However, the financial crisis was jolting to American workers. As a result, many employees are more financially conservative today and have a renewed interest in improving their financial decisions and planning and saving for retirement.”
According to the survey, the percentage of workers with defined benefit (DB) pension plans who are satisfied with their household finances jumped sharply in the past two years to 49% from 29%. DB participants are more than twice as likely to feel “very confident” about the first 15 years of retirement and 2.5 times as likely to contemplate a 25-year retirement with confidence compared with workers with only a 401(k) plan, the survey finds.
A larger percentage of younger workers (under age 40) are also satisfied with their household finances last year (47%) compared with 2009 (28%). However, nearly two in three (66%) of young workers says they will need to save much more in the future to achieve a comfortable level of retirement income. Moreover, the percentage of young workers who carefully reviewed their retirement plans increased by more than 40% between 2010 and 2011.
Other findings of the survey include:
● Nearly four in ten respondents (39%) plan to delay retirement, with older employees (46%) and those in poor health (42%) most likely to retire later. The majority of workers delaying retirement (60%) expect to work at least an additional three years.
● Nearly three-fourths of respondents (74%) use their employer or plan administrator’s website for educational material to help prepare for retirement. Almost two in three (65%) use online retirement tools and educational material mailed to their home.