A growing number of workers, especially those under 40 who are in a traditional company-sponsored pension plan, are willing to exchange some of their pay for more secure and generous retirement and health care benefits, according to a recent survey by consulting firm Towers Watson.
The survey of 9,218 full-time U.S. employees, found that more than half—55 percent—are willing to pay a higher amount from each paycheck to ensure a guaranteed retirement compared to 46 percent two years ago. And while older workers tend to be more concerned about retirement than their younger colleagues, the survey found that the most dramatic shift in attitudes toward retirement security has been among the under-40 set.
Among younger defined benefit plan participants, the number willing to pay for a guaranteed retirement benefit jumped from 39 percent in 2009 to 66 percent in 2011. In addition, half of all survey respondents said they would trade some pay to ensure access to health care benefits if they retire before becoming eligible for Medicare benefits, up from 40 percent in 2009.
"You wouldn't think that younger people would be willing to forgo immediate gratification, but the question we asked was about giving up future pay raises, about trading off something in the future," said Bill Daniels, senior retirement consultant at the Pittsburgh offices of Towers Watson.
He says that while employees are becoming increasingly worried about retirement security, it's easy to view retirement as event in the distant future and not as an immediate concern.
"Somebody once said that Americans are blissfully ignorant of retirement planning deficiencies," Daniels said. "It's easy to do. We don't value future events like we do things that are happening this afternoon. Overall, people are worried but we're still at that place where they aren't as worried as they should be."
According to the survey, which was conducted in June and July 2011, 63 percent of younger employees and four in 10 of all employees fear that their retirement benefits will be cut during the next two years. But even more are concerned about higher out-of-pocket health care costs and co-pays in the next two years.
In fact, rising health care costs was cited as the most important reason employees are concerned about retirement security by 64 percent of respondents.