Table 1 – Overall Economic Expectations
“Which of the following descriptions is closest to what you expect the economy to be doing 12 months from now?”
|
|
July 2011 |
June 2010 |
June 2008 |
July 2007 |
May 2006 |
June 2005 |
May 2004 |
Nov 2003 |
March 2003 |
Feb 2002 |
April 2001 |
|
The economy will be growing weakly (1 to 2% a year) |
54% |
71% |
52% |
67% |
62% |
68% |
63% |
70% |
61% |
64% |
55% |
|
The economy will be growing robustly (3% a year or more) |
4% |
6% |
4% |
10% |
15% |
14% |
26% |
14% |
8% |
13% |
10% |
|
The economy will be in recession |
42% |
23% |
44% |
22% |
23% |
18% |
11% |
16% |
30% |
13% |
21% |
Source: Mercer Workplace Survey
Typically, there is a direct correlation between economic outlook and retirement behavior. This year, however, despite deep economic concerns, participants seem to be renewing their focus on retirement savings and gaining confidence in their ability to do so. “In 2010, most participants saw the economy improving but not their own personal situation – a highly unusual divergence,” said Suzanne Nolan, Partner and Director of Marketing and Communications for Mercer’s US Outsourcing business. “This year’s results reflect a stunning reversal in terms of a highly negative view of the economy but a renewed commitment to and accountability for their own retirement planning.”
Proof of this renewed focus and confidence on retirement savings is reflected in several data points from the Mercer Workplace Survey. For example, over the past year 41% of participants claimed to have increased their 401(k) contribution rate (up from 31%), 40% reallocated existing portfolios (up from 33%) and 38% reallocated their future contributions (up from 29%).* In the coming year, participants also plan to contribute more to their 401(k) plans and a slightly higher percentage expect to contribute the tax-deferred maximum (11%, up from 8% in 2010).
These positive actions mirror a corresponding shift in attitude, with participants becoming more accountable for their key retirement decisions. A resounding 85% of participants feel confident in their 401(k) asset allocation, 83% in their investment selection and 77% in their contribution amount. These results are all improvements over 2010 results and, in fact, top some levels found in pre-recession responses (See Table 2).
Table 2: Level of Confidence in Retirement Decisions
“How confident are you that you’ve made the right decision with each of the following aspects of your 401(k)?” Respondents stating Very or Somewhat Confident:
|
|
Jul-11 |
Jun-10 |
Jun-08 |
Jul-07 |
May-06 |
Jun-05 |
May-04 |
Nov-03 |
Mar-03 |
|
The way you have your 401(k) assets allocated among stocks, bonds and cash |
85% |
79% |
77% |
82% |
80% |
76% |
82% |
75% |
77% |
|
The investments you've selected in your 401(k) |
83% |
80% |
77% |
78% |
78% |
71% |
79% |
72% |
73% |
|
The amount of money that you are contributing to my 401(k) |
77% |
75% |
75% |
76% |
78% |
73% |
79% |
72% |
82% |
Source: Mercer Workplace Survey
Health care costs in retirement also seem to be playing a bigger part of retirement planning. This year 36% of respondents identified saving for health care expenses in retirement as a major savings objective, up from 24% in 2010.
“We believe this increase in personal accountability among retirement plan participants is ‘good news’ for plan sponsors and their on-going efforts to increase employee engagement levels,” said Ms. Nolan. “Participants seem to be saying that they can no longer rely on market performance, their employer or the government to build their retirement savings for them, but must take control of every aspect they can in order to provide for a successful retirement. Employers and plan sponsors alike should see this as a unique opportunity to offer and promote tools and resources to assist participants in making informed retirement decisions.”
About the Mercer Workplace Survey™
The Mercer Workplace Survey tracks employee attitudes toward, and experiences with, employer-sponsored retirement, health and benefits programs.
The survey represents a national cross-section of active 401(k) participants defined as those currently contributing to a 401(k) plan irrespective of balance or having a 401(k) balance of $1,000 or more with their current employer whether or not they are currently contributing. Eligible non-participants and those only holding balances at previous employers are not included in this research. Respondents are also required to be enrolled in their employer’s health plan. Online interviews were completed with 1,507 participants between June 16 and July 1, 2011. The survey’s margin of error is plus/minus 2.6%.
About Mercer
Mercer is a global leader in human resource consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues by designing, implementing and administering health, retirement and other benefit programs. Mercer’s investment services include investment consulting, implemented consulting and multi-manager investment management. Mercer’s 20,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York and Chicago stock exchanges.
For more information, visit www.mercer.com.
*The base population for these responses included those participants who indicated they received information about how to allocate the assets in their 401(k) and which investments to choose.
