Seems like more and more workers are realizing just how much cash in the bank you need to be able to retire comfortably.
A new study from HR consulting giant Towers Watson says that nearly two out of three workers (62%) would be willing to give up some pay for guaranteed retirement benefits. In the dark days of the recession — 2009 — only 46% said they’d be willing to make that sacrifice, according to the Towers Watson Global Benefits Attitudes Survey.
Other significant findings of the survey: More employees are satisfied with their company-sponsored retirement benefits now compared with five years ago, but satisfaction with health care benefits, especially the cost of medical benefits, has declined.
Other survey results
The survey of 5,070 full-time employees found that two-thirds of respondents (67%) say they are satisfied with their employer-sponsored retirement plans, including defined benefit (DB) and 401(k) plans. That’s a jump of 13 percentage points since 2009, with much of the increase concentrated among younger employees and those with DB plans.
However, the number of employees who are satisfied with their health care benefits has declined from 69% in 2007 to 59% in 2013. The downward trend is most pronounced among older workers and those in poor health. The survey cited rising costs as a key factor fueling the decline, with only 38% satisfied with costs they must pay (including premium and out-of-pocket expenses) in 2013 versus 53% in 2007.
While almost two-thirds of participants said they’d sacrifice salary for a guaranteed retirement benefit (read: a pension); nearly six in 10 (58%) would sacrifice pay for simply more generous retirement benefits.
It’s a different story when it comes to health care benefits, however. Only one-third (34%) would give up some pay for more predictable health benefits, a drop from 42% in 2010. An even smaller percentage (27%) would be willing to take a larger amount from their paycheck in return for more generous health care benefits.
High level of concern about retirement
No question about it, retirement is a huge issue to today’s workers.
More than half of the respondents (56%) say that retirement security has become more important to them over the last few years. The importance of security was more pronounced for older workers: Nearly eight in 10 (78%) workers age 50 or older said they are concerned about it. Only four in 10 (39%) employees under age 40 are concerned.
Interestingly, the survey found that defined benefit plan participants (those with a pension program) worry more about retirement security than participants with only a defined contribution plan.
That may be a reaction to recent cutbacks in DB plans. According to Jonathan Gardner and Steve Nyce, writing on the Towers Watson blog, 75% of DB plan participants whose plans have been frozen are concerned about achieving a financially secure retirement.
Health plan satisfaction numbers dropping
Health benefits satisfaction has dropped, the authors note. Almost seven in 10 workers were happy with their health plans in 2007, but satisfaction rates dropped to 59% in 2013, a 10-percentage-point decline (Figure 5). This downward trend is most pronounced among older workers and those in poor health.
Only 48% of those enrolled in high-deductible health plans are satisfied with their health care plan. Given the increasing popularity of point-of-care cost sharing in health care program designs along with an aging workforce, plan satisfaction may weaken further in the future, Nyce and Gardner said.