By Marlene Y. Satter
The economy’s improvement has changed the top reason people give for not saving for retirement
— but that doesn’t necessarily mean there’s cause for celebration, because the new reason is given by even more people.
The No. 1 reason people gave in 2012 for not contributing to a defined contribution plan, according to Deloitte’s 13th Annual Defined Contribution Benchmarking Survey, was an “uncertain economy/job market”— cited by 24 percent of respondents.
That’s no longer the case, and in fact average account balances are now at an all-time high of more than $95,000. That’s an increase from $85,600 in 2012. Also there’s good news in that the number of employees participating in defined contribution plans
has increased, rising 6 percentage points (77 percent in 2013 vs. 71 percent in 2012).
There’s more good news in that the new leading reason hindering retirement savings is something that can be fixed, although not with a one-size-fits-all solution. The reason most cited today? “Lack of understanding,” a problem for 30 percent of respondents, compared with the economy, down to 14 percent.
Moreover, 81 percent of respondents said that improving participant education was a major concern.
“Defined contribution plans, both 401(k) and 403(b)
, now represent the main source of future retirement income for a wide and growing majority of the workforce,” Stacy Sandler, principal, human capital, Deloitte Consulting LLP, said in a statement. “It is imperative that employers and plan sponsors continue to encourage the growing trend in saving for retirement and focus on developing the right tools to educate and engage the workforce.”
Another thing that increased participation was immediate eligibility for company matching funds (with the number of companies providing that up 6 percentage points from 2012, at 62 percent), with 43 percent of employees saying that was their main reason for participating in the plan. That’s remarkable because it ranked higher than the personal importance of saving for retirement — the chief goal of a retirement plan, after all — with only 39 percent giving that as their reason.
Originally published on BenefitsPro.com