The survey found that average contribution rates to 401(k) plans have increased from 8.4% in 2004 to 9.9% in 2005 and that more employees are saving for retirement outside of the workplace (66% in 2005 vs. 58% in 2004), according to a Transamerica press release. The data also shows that 79% of employers say their employee-funded retirement plan offering is important to their ability to attract and retain employees compared to 75% in 2004.
Workers are also placing more value on retirement plans than before. Seventy-four percent of respondents view a 401(k) or other employee-funded retirement plan as very important, while 61% feel that way about defined benefit pension plans. In 2004, the figures were 66% and 46%, respectively. Fifty-eight percent of workers surveyed said they prefer excellent retirement benefits over salary, compared to 54% in 2004.
While geographic region had no significant impact on valuing one type of retirement plan over another, age showed a clear difference. The survey found that 79% of matures consider 401(k)’s very important, while 74% of baby boomers, 77% of gen-Xers, and 59% of echo boomers felt the same. As far as defined benefit pension plans, 68% of matures and 69% of baby boomers felt they were very important, and 61% of gen-Xers and 32% of echo boomers felt the same.
The survey also found that women place more value on both types of retirement plans than men. Seventy-eight percent of women, compared to 70% of men, felt defined contribution plans were very important, and 65% of women, compared to 57% of men felt defined benefit plans were important.
Workers are not confident in their retirement savings, though. Only 44% of respondents felt like they are saving enough for retirement. Sixty-seven percent said they could not afford to save more and 16% said they are too much in debt to save more. Only 23% of workers said they feel very confident that they will be able to retire comfortably, compared to 31% that said so in the 2004 survey. They have also bumped up their estimated retirement age from a median of age 63 in 2004 to a median of age of 65 in this year’s survey.
Improvements in retirement savings behaviors can still be made, according to the release. Participation rates have decreased from 76% in 2004 to 74% in 2005. Twenty-four percent of employees said they don’t know how much they’ll need to save for retirement and, on average, workers only spend 10 hours per year managing and monitoring their retirement accounts.
The telephone survey resulted in 603 employer interviews and 1,387 worker interviews.
Full survey results can be seen here .