New Research From The Hartford Finds Americans Are Worried About Losing Ground On Retirement Savings (Business Wire)
Mon, 15 Jun 2009 13:12:00 Etc/GM
The survey, conducted earlier this spring, found that 56 percent of respondents worry they will be unable to maintain their current level of contributions to their employer’s 401(k) or other defined contribution retirement plan. A total of 34 percent were “extremely” or “very” worried about sliding back on how much they save.
Nearly as many employees – 53 percent – said they are concerned that their employer will reduce or eliminate matching contributions on their retirement savings. Three in 10 (30 percent) were “extremely” or “very” worried.
Employers can play a big role in encouraging employees to save for retirement and can help boost contributions to defined contribution retirement plans such as 401(k)s, according to Tom Foster Jr., The Hartford’s national retirement spokesperson. In many instances, Foster said, employers can increase participation in retirement plans without incurring additional costs.
“In these difficult economic times, America’s workers are worried that they will not have the financial wherewithal to continue their current lifestyles when they retire,” Foster said. “The good news is that Americans are thinking more than ever about retirement and the need to save for it. The bad news is that they are finding it more difficult than ever to do something about it. Employers do have an opportunity to help.”
Nearly one in three (32 percent) survey respondents said they were likely to postpone making additional contributions to their retirement plan and one in four (24 percent) said they were likely to postpone retiring altogether.
Those numbers could pose problems for employer-sponsored retirement plans as declining participation rates and reduced contributions can have a negative impact on the viability of the plan, according to Foster. If the gap between what highly compensated and non-highly compensated employees contribute to a company’s retirement plan exceeds IRS guidelines, he explained, then many highly compensated employees may be forced to take back a portion of their contributions and pay additional income taxes.
Despite the current tough economic times, Foster said, there may be ways for employers to encourage employees to contribute to their retirement plan and even increase participation without having to institute or increase matching contributions:
- Sponsoring educational meetings. Most retirement plan providers can make trained specialists available to lead educational meetings for employees, explaining the advantages of regular retirement savings, tax-deferred accumulation, and how pre-tax savings will make less of an impact on their paychecks than after-tax savings.
- Promoting the new Savers Credit. Employees who earn relatively modest salaries can qualify for a special federal Savers Credit based on their contributions to a defined contribution retirement plan or IRA. The tax credit can equal as much as 50 percent of their total contribution, capped at a total credit of $1,000, depending upon how much they save and their income level.
- Adopting automatic enrollment. A 2006 study by Hewitt Associates found that nine in 10 employees participate in their employer’s 401(k) plan if they are automatically enrolled in it. Among other requirements, employers must notify employees of the automatic enrollment and employees must be allowed to opt out.
Foster regularly works with financial advisors to help them meet the needs of retirement plan sponsors and participants, and in the process, improve their retirement plans. He encouraged financial advisors to reach out to plan participants and help them navigate the uncertain market environment.
“There is no doubt that the current economic climate is having a dampening effect on retirement savings,” Foster said. “Employers are more challenged than ever before to encourage employees to participate in retirement savings plans. Fortunately, there are some creative ways to promote the importance of retirement savings and help employees stay on track.”
The survey, conducted by Opinauri in April 2009, was conducted online and polled 1,019 U.S. adults age 18-64. The survey has a margin of error of 3.5 percent.
About The Hartford
The Hartford is one of the nation's largest financial services companies and a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; and business property and casualty insurance. International operations are located in Japan, the United Kingdom, Canada, Brazil and Ireland. The Hartford's Internet address is www.thehartford.com.
HIG-L
This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. This information cannot be used or relied upon for the purpose of avoiding IRS penalties. This material is not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2008 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
Contact:
The Hartford David Potter, 860-843-8993 david.potter@hartfordlife.com or Timothy Benedict, 860-843-5150 timothy.benedict@hartfordlife.com
source: http://biz.yahoo.com/bw/090615/20090615005729.html?.v=1