KANSAS CITY, MO--(Marketwired - August 11, 2016) - American workers value their retirement plans so much that more than three out of four would choose a match on their retirement contribution over a comparable salary increase, according to a national survey conducted by American Century Investments.
The fourth annual study, comprised of responses from 1,504 full-time workers (grouped by ages 55 - 65 and 25 - 54) who currently participate in their employer's retirement plan, looked at their responses and perspectives on retirement savings. The survey focused on employee regrets about saving and their reliance on employers' influence and guidance, according to American Century Investments Vice President, Practice Management Diane Gallagher.
"Plan participants told us that, without a doubt, they would be in much worse shape without access to an employer-sponsored plan," Gallagher said. "Nearly all express regrets about their personal savings habits, which says to us that employers have the opportunity to structure plans that can help drive more effective retirement preparations for their employees. In essence, employers have the keys to the kingdom."
Key study findings include:
- Saving continues to be the area for which employees have the most regret and need the most guidance.
- Plan participants count on their employers' direction and guidance in helping save and invest for retirement.
- Participants strongly value a retirement plan as part of their compensation and benefits.
Some 90 percent of participants expressed at least a "little" regret with respect to saving for their future, and 80 percent believe they could have saved more in the past, according to the survey.
Other survey learnings include:
- Participants point to the first five years of their working lives as the period of time for which they have the most regret.
- Common obstacles to saving cited include not earning enough, having to pay off debts and incurring unexpected expenses.
- Nine in 10 said it would be "at least somewhat important to tell their younger selves to save more."
- However, seven in 10 said they would be "at least likely to listen to their future self."
- Looking back, participants' single biggest regret is not saving enough for retirement.
- Participants are five times more likely to believe it is worse to have too little money in retirement than to miss out on something today.
"The recognition of those first five years is an acknowledgment of the effect of compounding and awareness of their own behavior," Gallagher said. "Participants accept the importance of habit, and starting earlier would have resulted in a pattern of consistent saving over the years."
The influence of employers on participants saving for retirement cannot be overstated, according to the study:
- Despite giving themselves a "C" on saving and a "C+" on investing for retirement, participants awarded a "B-" grade on the help offered by their employers.
- Eight out of 10 employees want at least a "slight nudge" from their employers in helping to save and invest for retirement.
- Some 70 percent believe automatic enrollment at six percent is something the company should do.
- More than 50 percent feel automatic enrollment should be implemented retroactively.
- Seven in 10 show at least some interest in a regular, incremental automatic increase.
- The same number (70 percent) support plan investment re-enrollment into target-date solutions.
"Although plan sponsors may be reluctant to put into place aggressive defaults or automatic programs for fear of employee backlash, our research shows that participants are actually in favor of these types of measures," Gallagher said. "As long as there is an 'opt-out' provision in place, we believe that employers can pay attention to the overwhelming validation among plan participants for automatic features."
Value of Plan
A defined contribution plan is viewed by more than 80 percent of participants as one of their most important benefits, the research found. Other key findings:
- More than eight out of 10 participants strongly agree that their employer offering a retirement plan makes them feel better about working there.
- Roughly two thirds of employees would choose to work for a company offering a retirement plan over one that does not, even if a competing company offered a five percent higher salary.
- Eight in 10 percent of participants would prefer a 100 percent company match on their retirement contribution up to three percent, rather than a three percent salary increase.
- Three quarters of participants feel the same way even when the figure is raised to six percent.
"The majority of respondents choosing a contribution match over a comparable salary increase truly underscores the value they place on their retirement plans," Gallagher said. "We believe employers and their providers have a great opportunity to make a real difference on the livelihood of their employees."
American Century's Defined Contribution Investment Only (DCIO) assets under management total $38 billion; assets under management in American Century One Choice Portfolios® total $16 billion as of June 30, 2016.
The survey was conducted during the first quarter of 2016 among a total of 1,504 full-time workers between ages 25 and 65, participating in their employer's retirement plan, intending to retire at some point, and not working for the government. The data were weighted to reflect the makeup of key demographics (gender, income and education) among all American private sector plan participants between the ages of 25 and 65 (according to estimates from the 2012 U.S. Consumer Population Survey). Data collection and analysis were completed by Mathew Greenwald and Associates of Washington, D.C.
About American Century Investments
American Century Investments is a leading privately held investment management firm, committed to delivering superior investment performance and building long-term client relationships since its founding in 1958. Serving investment professionals, institutions, corporations and individual investors, American Century Investments offers a variety of actively managed investment disciplines through an array of products including mutual funds, institutional separate accounts, commingled trusts and sub-advisory accounts. The company's 1,300 employees serve clients from offices in New York; London; Hong Kong; Mountain View, Calif.; and Kansas City, Mo. Jonathan S. Thomas is president and chief executive officer, and Victor Zhang and David MacEwen serve as co-chief investment officers. Delivering investment results to clients enables American Century Investments to distribute over 40 percent of its dividends to the Stowers Institute for Medical Research, a 500-person, non-profit basic biomedical research organization. The Institute is the primary owner of American Century Investments and has received dividend payments totaling over $1.2 billion since 2000. For more information about American Century Investments, visit www.americancentury.com.
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American Century Investment Services, Inc., Distributor.