Although US workers express moderate optimism about the economic outlook, those saving for retirement through their employers’ 401(k) plans are cutting back on their planned savings this year as compared to last year. They are also increasingly concerned about health care costs in retirement.
These sentiments were uncovered by the 2013 Mercer Workplace Survey of 1,506 US retirement plan participants who also receive health benefits and are most acute among survey respondents over age 50, who have lowered their anticipated 401(k) contribution amount by more than 18%.
Employees now have an improved outlook on the economy compared to the two prior years. More than three-quarters (77%) expect economic growth in the year ahead, up four percentage points to match the post-recession figure seen in the 2010 survey.
With personal incomes flat and GDP growth feeble, US 401(k) participants expect to make lower retirement contributions in the coming year. Those aged 50 years and older anticipate significantly lower contributions than their 2012 forecast. For those under 50, the anticipated contribution is lower though more in line with the prior year’s survey.
Saving for health care expenses in retirement has escalated as a major savings objective among participants in the Mercer Workplace Survey. Of those 50 to 64 years old, 45% are now focused on saving for retirement health expenses, a 13-point increase over the prior year’s survey.
In addition, health care expenses in retirement have become the biggest financial worry for older participants (ages 50 to 64), ranking much higher than in the previous year’s survey. This concern has even surpassed “saving enough for retirement” itself as the financial problem most likely to keep older respondents awake at night.
For more information and to download the survey summary, visit www.mercer.com/mercer-workplace-survey.
Andrew Yerre (Norwood, Mass.)
Partner, Benefits Administration
+1 857 362 6020