Many Workers Wish They Had Started Saving Earlier

Nine in 10 workers have at least some regret about when they started saving for retirement, American Century found in a survey of 2,031 defined contribution plan participants. Seventy-five percent said they could have saved a little more in the past. More than half point to the first five years of working as they time when they could have saved more than they did. A majority said not saving enough for retirement was one of the biggest mistakes of their lives.

Despite this regret, half of those aged 55 to 65 and 60% of those 25 to 54 admit they are still saving less than they should.

“Retirement plan participants have a great deal of regret about their past saving behavior” says Diane Gallagher, vice president of defined contribution investment only (DCIO) practice management at American Century. “Plan participants aren’t expecting to be rich. They are really aspiring for independence, rather than affluence. Also, they realize it’s important to save through their defined contribution plan, but they look to their employers to help them establish positive saving and investing patterns.”

In fact, given a choice between two job offers—one with a retirement plan and one with a higher salary—pre-retirees are five times more likely to choose the retirement plan offer, demonstrating how much workers, especially older workers, value employer-sponsored retirement plans.

NEXT: Expectations of their employers

Eighty percent of those surveyed said they would have more savings had their employer given them a “slight nudge” to save more. Seventy percent favor automatic enrollment starting at 6%, and more than half support that initiative for all employees rather than just new hires. In addition, nearly 80% would accept automatic escalation.

As to using target-date funds as the default investment, 68% of pre-retirees and more than 70% of those aged 25 to 54 are in favor. Few participants believe their employers have done everything possible to help them prepare for retirement. Only 14% of all of those surveyed and 11% of pre-retirees say their employer did everything possible to encourage them to save.

More than 70% said retirement is one of their biggest financial goals, if not the No. 1 goal. However, 90% of pre-retirees and 70% of the younger group expect their standard of living to be roughly the same or worse than it is today.

“Even though plan sponsors don’t think participants want them to intervene, in reality, they are looking for a higher level of support,” Gallagher says. “Participants are willing to make adjustments to their current lifestyle, rather than suffer the consequences later. Although participants are technically able to drive, they are willing to be attentive passengers with their plan sponsors steering the car.”