Filed Under:Life Insurance, Life Planning Strategies

Report pegs outside retirement savings at over 55%

About 45 percent of workers have retirement savings outside of retirement plans established by their employers.
About 45 percent of workers have retirement savings outside of retirement plans established by their employers.

Close to half of workers have retirement savings outside of their current employers, according to a new report.

Towers Watson discloses this finding in an analysis of a 2010 Survey of Consumer Finances. Conducted by the Federal Reserve Board, the triennial survey gathers detailed information about the income, savings, benefits, investments and demographic characteristics of a 30- to 60-year olds currently working for companies with more than 100 employees.

Towers Watson estimates that about 45 percent of workers have retirement savings outside of retirement plans established by their employers. On average, such savings account for more than half (55 percent) of the workers’ nest eggs.

Retirement savings varied widely among workers in 2010. The median accumulation was $79,300 and the average $187,100, with a significant number of workers having minimal savings (4,000 and $21,000, respectively, for those in the 5th percentile and 25th percentile).

At the other end of the wealth spectrum, retirement savings were substantial: Those in the 75th percentile and 95th percentile had $231,000 and $733,100 accrued, respectively.

Almost 7 in 10 of all workers surveyed in 2010 (69.8 percent) had a defined contribution plan and nearly one-third (32.6 percent had a defined benefit plan with their current employer. Defined contribution and defined benefit plan assets constituted 39.9 percent and 8.9 percent of asset, respectively, outside of their employer-sponsored plan.

“Among survey participants, DB plan benefits (present value) tend to be more valuable than DC account balance,” the report states. Median balances for these accounts are $164,200 (DB) and $33,000 (DC).

The percentage of workers with outside savings was 56.2 percent among those ages 51 through 60. This compares with 44.2 percent and 33.5 percent among workers in 41-50 and 30-40 age brackets, respectively.

The report notes also that workers who have less tenure on the job have a proportion (86.5 percent) of retirement saving outside their job than do workers with more tenure (55.4 percent, 38.6 percent and 37.6 percent among workers with 2-5, 6-10 year and 10-plus years of tenure, respectively).

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Nichole Morford

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