Current Financial Pressures Take Priority Over Retirement Savings

Investors are more focused on immediate financial needs than they are on preparing for retirement, according to the fifth annual Mercer Workplace Survey, this year conducted among 2,000 participants in 401(k) and health savings accounts.

Citing larger debt balances and falling home prices, respondents said that they are more concerned with keeping up with monthly expenses than saving for retirement. Twenty-one percent said their biggest financial worry is keeping up with monthly expenses, and 15% said it’s saving for retirement. In 2004, it was the reverse, with 24% most concerned about retirement savings and 15% monthly expenses.

Still, 80% said they know they are responsible for their income in retirement and 70% said it’s their No. 1 savings goal. Sixty percent expect to work at least part-time in retirement, and 40% expect to reduce their standard of living.

“These findings challenge employers and their 401(k) administrative partners to take a more proactive approach to assist participants in preparing for retirement,” said Jeff Miller, president of Mercer’s outsourcing business. “Simplifying the process of saving for retirement through effective plan design, coupled with integrated education programs that recognize the challenges participants face today, are critical to achieving this goal. These results also suggest participants would welcome programs that integrate features such as automatic enrollment, automatic contribution increases and enriched match programs to help them save more for retirement.”

Employers and administrators should simplify their plans and supply investors with education and decision support tools, Miller said.