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Benefits November 19, 2013
Health Care Worries Dent Savings Goals
November 19, 2013 (PLANSPONSOR.com) – Participants in employer-sponsored retirement plans are prepared to reduce 401(k) account contributions to mitigate worries over health care expenses, the Mercer Workplace Survey finds.
Reported by John Manganaro
Results from Mercer’s annual survey indicate workers in the U.S.—especially those closest to retirement—are decreasing planned savings goals for the future. In fact, while retirement plan participants have generally become more optimistic about the economy this year, they are planning to save slightly less over the next 12 months.
For workers over the age of 50, worries over increased health care costs and other expenses have driven down savings goals by about 18%.
When looking across all age groups, preretirees are likely to dial back on their 401(k) contributions by about 10% in the year ahead. These same workers are also distrustful of the Patient Protection and Affordable Care Act (or ACA), the survey says, and consequently expect to be worse off due to the health care reform law by a ratio of almost six to one.
Regarding the nation’s general economic outlook, more than three out of four (77%) workers expect economic growth to continue in the year ahead, up four points to tie the post-recession bounce noted by Mercer in 2010. The proportion of those expecting another recession in the near future fell to 23%.
Other figures reported in the survey indicate improving local home values is the most powerful factor driving optimism among preretirees, with half of all respondents expecting home values in their area to be higher a year from now—up 15 points over last year’s survey.
The proportion expecting higher unemployment is also down, but the proportion of workers expecting lower unemployment remains flat.
Perceived job security is virtually unchanged, notching a two-point increase in the share of workers concerned about losing their jobs in the next 12 months. Workers over the age of 50 actually feel somewhat more secure; those under 50 marginally less so. Although high by historic standards, the proportion of workers considering delaying retirement (40%) is down four points, the survey shows.
A full summary of the annual survey results can be downloaded at www.mercer.com/workplace-survey.