How Your Employees Really Feel About Retirement Benefits
We can’t make up your mind for you, but we do have some great data about how your employees think about benefits in general, particularly retirement benefits. So, let’s dive in!
All Benefits Are NOT Created Equal
We surveyed 1,246 American workers to understand how they look at retirement. As part of our research, we also wanted to understand how they see other benefits, so we asked workers to choose the three benefits that were most important to them. The top three were in a league of their own:
- Health insurance was named by 81 percent of workers
- Retirement plans: 62 percent
- Vacation or PTO: 57 percent
Dental and vision coverage also got the thumbs up from over 30 percent of workers, but no other benefits were named by more than 7 percent of survey respondents. It should also be mentioned that employers generally seem to be pretty in tune with what their employees want in this regard. Health, retirement, and vacation benefits are also the most likely to be offered to employees.
Your Employees Aren’t Ready for Retirement
It appears that retirement benefits are important because the ability to live happily ever after is a big uncertainty for many of your employees. Separate research by the Economic Policy Institute shows that only about half of all workers have any retirement savings, and the average savings for couples approaching retirement is just $17,000 — which often isn’t enough to cover a single year of living expenses.
Our survey added even more color to the EPI’s data: when a worker isn’t offered a retirement plan by their employer, there’s only a 32 percent chance they feel confident they’ll be able to retire comfortably someday. That number jumps to 54 percent when they’re offered a retirement plan.
For the record, 82 percent of workers participate in a retirement plan when they’re given the chance.
What a Retirement Plan Means to Your Employees
Employees who are given access to a retirement plan are almost twice as likely to be satisfied with their overall benefits package (71 percent vs. 38 percent). Their sense of satisfaction and security also benefits your business, because offering a retirement plan goes hand in hand with improved employee retention.
Just 21 percent of employees who have access to a retirement plan say they’re likely to look for a new job over the next year. The percentage of employees who think about jumping ship is 31 percent when no plan is offered. To be fair this improvement in retention is correlation, not causation. Employees who receive retirement benefits are also more likely to receive other benefits, for example, but there’s no doubt that improved retention can save your company a lot of money. A study by The Center for American Progress estimated that filling a vacancy costs about one-fifth of an employee’s annual wages.
Employees also like that having an employer-sponsored retirement plan makes things easy for them. 62 percent of employees who don’t have a plan say that the ease of investing would be their top reason for participating in one (if offered).
Make Sure You Get Things Right
If you decide to offer a retirement plan, you’re doing your employees a huge favor, but you can do them an even huger favor by doing a little research to make sure your plan helps them reach their goals. In 401(k) plans with less than 100 participants, for example, the average employee loses 1.25 percent of their investment to fees each year. Here’s what that means over the course of a career:
The graph above is provided for illustrative purposes only and is not intended to constitute investment advice nor an assurance or guarantee of future performance. Investing involves risk and investments may lose value.
Only 27 percent of workers realize that there are fees associated with their retirement plans — let alone how much of an impact they can have, and business owners and managers participate in the same retirement plans as everyone else, so those fees can hurt you, too!
Good luck building your team and giving them everything they need to stay healthy and happy. We hope that picking the right benefits gives you an advantage against the competition and gives everyone involved in the success of your business a brighter future.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.