New research conducted by the non-profit Transamerica Center for Retirement Studies found that the availability of a plan is highly correlated to proactive saving behaviors that go beyond simply providing a vehicle to save. For example, workers who are offered a plan started saving at a median age of 28 (two years before those without plans) – a choice that provides them with more time to contribute and potentially grow their savings.  More significantly, of those offered access to a workplace retirement plan (and in the Transamerica study, 77% take advantage), two-thirds (66%) are saving for retirement outside of the plan provided by their employer.  Just 57% of those not offered a plan are saving outside of work.

Additionally, workers offered an employee-funded savings plan also appear to be at a distinct advantage because they are more likely to have a retirement savings strategy; 61% say they have developed some form of a retirement savings strategy, compared to just 40% of those without an employee-funded plan. They also demonstrate a better understanding of the fundamentals of retirement investing. Some notable findings include:

Haves and Have Nots

The results of the 11th Annual Transamerica Retirement Survey—conducted among nearly 3,600 American workers—found that workers who are offered 401(k) plans, or similar employee-funded arrangements, exhibit more proactive retirement savings behaviors, demonstrate higher levels of knowledge about retirement investing, and are more confident in their ability to retire comfortably.

According to the survey 78% of workers with access to a workplace plan feel that they understand asset allocation principles, compared with 53% of those who don’t have a workplace plan.  More than a quarter (29%) of those without a plan say they are “not sure” how their savings are invested, more than twice the number (14%) who have a workplace plan. 

As a consequence of these disparities, Transamerica referred to a Tale of Two Retirements – because, ultimately the differences in savings behaviors and levels of retirement knowledge between workers who have access to a plan versus those who do not may lead them to drastically different realities when they reach retirement age.

Confidence Builders

According to the survey, although retirement confidence is lacking among most workers, workers who are offered a 401(k) plan or similar arrangement are more likely to agree that they are building a large enough retirement nest egg (45%) than those who weren’t (27%).  Perhaps as a result, significantly more workers without a plan expect to retire after the age of 70 or not at all (47% versus 36% with access to a plan), and more workers without plans expect to rely on Social Security as their primary source of retirement income (31% versus 20%).

“Although the economic downturn and volatility in the financial markets has illuminated the risks involved with investing in 401(k) plans, the necessity for workers to save and plan for retirement remains the same,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies, in announcing the results.  “There is greater risk in not having access to an employee-funded plan at all.”

The survey found that workers at large companies are more likely to be offered a 401(k) or similar plan (80%) than those of small companies (60%).  Only about half of part-time worker respondents (48%) indicated that their company offered them a plan, compared to 82% of full-time workers. Part-time workers at small companies are even worse off: only 33% are offered a plan, according to the survey.

The survey found that workers in their twenties (57%) are less likely to be offered a plan than older workers; roughly three-quarters of those aged 30 through 60 had access to a workplace plan. 

The full survey results are available at http://www.transamericacenter.org/resources/tc_center_research.html

The 11th Annual Retirement Survey was conducted online within the United States by Harris Interactive on behalf of Transamerica Center for Retirement Studies between December 3, 2009 and January 18, 2010 among 3,598 full-time and part-time workers. Potential respondents were targeted based on job title and full-time and part-time status. Respondents met the following criteria: All U.S. residents, age 18 or older, full-time workers or part-time workers in for profit companies, and employer size of 10 or more.