Confidence in Employer-Sponsored Plans Shaken

December 5, 2009 ( – Workers are clearly nervous about making ends meet in retirement – and their confidence in workplace savings plans has plunged, according to a new survey.

Confidence in employer-sponsored pension plans has plummeted, according to the 2009 Investments and Retirement Survey by The Hartford Financial Services Group, Inc.  More than one-third of all survey respondents (34.4%) said they were “not at all confident” that the income from their employer-sponsored pension plan would be guaranteed for as long as they lived in retirement, and nearly half (45.4%) were either “not too confident” or “not at all confident.”  

According to the Hartford, in the previous three annual surveys the highest response rate for “not at all confident” was 5%, while the highest total for “not too confident” and “not at all confident” combined was 15.1% as recently as 2008.

According to the 2009 Investments and Retirement Survey by The Hartford Financial Services Group, Inc., the top financial concern in retirement – simply meeting everyday expenses – dominates all other concerns.  In fact, keeping up with daily expenses for food, shelter and other basic needs spiked in 2009 to 65.2%, surging from 49.7% that placed that priority in 2008, and well ahead of the roughly one-in-four that said so in 2007. 

That trend may explain why the prospect of enjoying life in retirement appears to have dimmed – just 14.4% of respondents expressed that sense in this year’s survey, about half the number that did in 2008 (26.2%), and only a quarter of those who said so (43.2%) in 2007.

The Good News? 

So, what’s the good news?  “…the Hartford’s research shows that people who have taken the time to plan their retirement are generally in a better place financially and are significantly more optimistic about the future than those who have not planned,” Jamie Ohl, senior vice president and director of The Hartford’s Retirement Plans Group, said in a press release. 

When it comes to retirement, the fourth annual version of the Hartford survey found: 

  • Those who planned for retirement were three times more likely to be confident that they will have sufficient income in retirement as compared to those who have not planned. Nearly one-third (31.5%) of those who had planned (planners) said they were “very” or “extremely” confident of having sufficient income for retirement as compared to 10 percent for those who had not planned (non-planners).
  • Nearly three in five planners (57.7%) said they were on target to retire as planned compared with 38.7% of those who did not take planning steps. More than four-in-ten of those who did not plan said they had no idea as to when they might retire.
  • Of those who had not created a financial plan, 42.5% said they did not know where to turn as compared to 9.6% for planners (who, at least ostensibly had already located a person/mechanism).
  • Those who described themselves as planners were three times more likely to rely on an independent financial expert for credible financial advice than those who said they did no planning (39.9% vs. 13.4%). 

That said, few were confident in their personal financial planning capabilities. In 2009, 82.7% of survey respondents said they were less than confident in their financial planning knowledge and abilities, with 34.2% indicating they were “not too” or “not at all” confident.  In fact, the Hartford data indicated that retirement and/or financial planning were viewed as too complex or too difficult by one in two Americans – though the number of people who have taken steps to plan for retirement remains relatively unchanged from 2008.

Among those who had planned for retirement, 18.4% said their investment earnings had increased as compared to 4.8% of non-planners, and “planners” were twice as likely as non-planners to have increased their net worth (albeit a mere 12.2% vs. 5.3%).  Nearly a third (32.7%) of those planners said they save more, compared with 22.4% of non-planners. 

Growing Concerns

The Hartford’s research identified growing concerns about financial security and the ability to find the path to financial security in retirement:  

  • Nearly a third of all respondents (31.6%) now say they have no idea as to when they will be able to retire, while roughly one-in-five (19.3%) indicated they will have to postpone retirement for up to two years or more in the aftermath of market meltdown.
  • Nearly four out of five survey respondents (78.3%) are less than confident that all of their sources for retirement income (including employer-sponsored pension plans, government-sponsored pension plans and personal savings and assets), will be adequate to maintain their standard of living in retirement.  However, that’s not much changed from the 74.6% in 2008, or the 78.5% who expressed that uncertainty in 2007. 

The Hartford’s fourth annual retirement survey was conducted this summer and polled 751 consumers age 45 and older. The survey has a margin of error of +/- 3.5%.