The Washington D.C. group’s Retirement Confidence Survey showed that some workers are putting their confidence in employer benefits that are increasingly becoming unavailable, with 41% of workers saying they or their spouse now have a DB plan, but 62% of those respondents saying they expect to get income from that plan in the future.
According to the report, this means that 20% of workers are counting on getting DB pensions from a future employer – a reality that is becoming dimmer as employers continue to shift in droves to DC plans. In fact, the report shows that this has already begun to happen as some workers (17%) admit to already seeing a reduction in their benefits.
Workers are taking the following measures to make sure they have enough for retirement:
- 32% say they are saving more, either on their own (24%) or in an employer’s plan (8%).
- 12% say they are trying to stay healthy;
- 5% plan to work during retirement ;
- 5% are making greater use of financial planning or investment information;
- 4% plan to postpone retirement;
- 4% plan on seeking advice from a financial professional; and
- Almost four in 10 indicate they have done nothing in response to the reduction in benefits.
Some Reluctance to Act on Investment Advice
Even as defined contribution plans emerge as the preferred employer-sponsored pension plan, the report suggests that workers may not follow investment advice when it’s offered.
More than half of workers (54%) indicate they would be likely to take advantage of professional investment advice offered by companies that manage employer-sponsored retirement plans; however, 66% of these workers say they would probably implement only some of the recommendations they receive and 11% think they would implement none of them.
Nineteen percent of workers state they would be very likely to take advantage of investment advice if it were available at a modest cost; 35% said they would be somewhat likely to take advantage of the service; and approximately two in 10 each would be not too likely (21%) or not likely at all (22%) to use such services.
Overconfidence in Health Care Coverage
Even though many employers are eliminating health care coverage for future retirees, 41% of workers expect to have access to employer-provided health insurance when they retire.
The report found that24% of workers and 35% of retirees report they have long-term care insurance (separate from health insurance, Medicare, and Medicaid) to help pay for care they might need in a nursing home, assisted living facility, or at home. Estimates of privatelong-term care insurance policy use show that 10% of Americans age 65 and older had private long-term care insurance in 2002, suggesting that many are counting on coverage they do not actually have, the report said.