A new survey from the Transamerica Center for Retirement Studies shows American workers—not simply older ones—have made drastic changes to their retirement plans and need new strategies to help savings last throughout their lifetimes.
More than half, or 56 percent of the 3,600 American workers surveyed say they plan to work past age 65. Meanwhile, 54 percent say they plan to continue working in retirement.
Throughout the economic tailspin, which started in 2007, workers have remained faithful in contributing to their retirement accounts, says Catherine Collinson, president of the Transamerica Center for Retirement Studies in Los Angeles. But 64 percent of workers say they are less confident in their ability to achieve a financially secure retirement since the recession began in 2008.
Since more than half of survey respondents say they don't think they are building a sufficient nest egg, and that percentage is consistent for all ages of workers, a new definition of retirement readiness is needed Collinson says.
"It has truly been a challenging few years," Collinson says. "Workers have already changed their expectations of retirement and now it's time for the industry, media and others to recognize that and update the definition of retirement readiness."
The 13th annual Transamerica Retirement Survey was conducted in January and released in May. It includes responses from 3,609 full- or part-time workers ages 18 and up. This year, Transamerica created a new definition of retirement readiness, focusing on participants having a solid strategy to build an income that can cover living expenses throughout a lifetime and can withstand unexpected circumstances.
While Transamerica also came up with a five-point checklist to help workers prepare for retirement, Collinson says one of the most important steps is to have a written strategy. The survey shows 45 percent of workers say they have a retirement strategy, but only 12 percent of survey respondents say they have it written down. More than a third of workers in their 50s and more than a quarter of workers in their 60s have no plan at all.
"People who have a written-down strategy are exhibiting more proactive savings behavior that will help them in the long run," Collinson says, adding that 55 percent of workers with a written plan understand asset allocation strategy.
As would be expected, 90 percent of workers say a 401(k) or similar plan is important, yet 76 percent are offered a defined contribution plan. Plus, 53 percent of respondents say they would be likely to leave their job if a nearly identical job with better retirement benefits were available.
The statistic is significant because a few years ago, workers were more concerned about holding onto their current job and not factor retirement benefits into the mix, Collinson says.
"The likelihood of switching to a new job indicates how important a plan is to a worker," Collinson says. "It seems the labor market may be getting better for workers and they are less fearful of making a switch."
Patty Kujawa is a writer based in Milwaukee. Comment below or email firstname.lastname@example.org.