Less than half save outside retirement plans
By Dan Berman
A Towers Watson survey finds 45 percent have put away money outside of their current employers’ retirement plan but it’s not clear the amount saved will cover expenses in old age.
The report, based on an analysis of the triennial Survey of Consumer Finances conducted by the Federal Reserve Board in 2010, found the median amount of retirement savings was $79,300 and the average was $187,100.
About 70 percent of workers were part of a defined contributions retirement plan, while a traditional pension program covered a third. Which type of plan an employer offered made a huge difference in savings. Those in the latter category had a median balance of $164,200 vs. $33,000.
The sources of savings in addition to the plans offered by workers’ current employers include personal IRAs, pensions from previous jobs, pensions belonging to a spouse or partner and pensions belonging to a former spouse or partner to which they have some right.
In addition to savings in various retirement plans, most workers would be eligible for Social Security, which Towers Watson noted would add a substantial amount to retirement benefits. The analysis cautioned that information about household demographics and economic situations would be needed to determine the adequacy of the retirement savings.
A number of surveys have looked at the retirement readiness of U.S. workers. A J.P. Morgan Asset Management poll this year found that more than half thought they would need 75 percent of their working salary to live on in retirement. Many experts say that figure is too low. In addition, 40 percent of workers said they had no plan for their retirement savings and would figure it out as they went along.
Originally published on BenefitsPro.com