Sigh. There’s still no shortage of misconceptions about saving for retirement out there, and some of them are downright head-shakers if they are to be believed.
Like this one: A whopping nine in 10 industrial workers think you need an office job to start saving for retirement, according to a new survey from retirement benefits provider Human Interest.
The survey of 2,000 Americans, half between the ages of 18-29 and half between 30-64, looked at how these groups plan for retirement across various fields of employment. It also looked at some of the frequent reasons people think they won’t be able to retire.
Workers at micro-sized companies (between 2-9 employees) were most intent on retiring in their 50s (32%)—but 24% of this group said their current employer doesn’t offer a retirement plan.
Overall, nearly half of all respondents (47%) said they think you can be “too old” to start saving for retirement.
Among all the reasons employees noted as keeping them from working at their desired level, pandemic-related stress was at the top of the list (44%), with finance workers being the most likely group to cite it as a barrier to reaching retirement (57%).
Meanwhile, 40% of workers think they won’t have enough money to last the rest of their life, particularly healthcare workers (61%). Similarly, 47% of education professionals think they’ll burn out before reaching retirement, while HR workers are most worried about potential job loss standing in their way (47%).
In terms of how they save for retirement, preferences differed across industries and company sizes. People working at large companies (1000+ employees) were most likely to use a 401k (52%), 29% greater than those at small businesses (10-50 employees). Those at mid-sized businesses (51-249 workers) favored real estate (53%), and crypto was a popular choice among those at small organizations with a staff of 10-50 (44%).
To ensure they hit their retirement age, 37% said they would exchange a job they liked for a better-paying one they liked less, and 32% would change jobs to one with a better 401k plan. Respondents ages 30-64 were more likely than 18-29-year-olds to say they’d change jobs for a better 401k (36% vs. 28%).
“The pandemic took a different toll across industries, adding to existing sector-specific challenges when it comes to retirement savings,” said Eric Phillips, Senior Director, Partnerships & Strategic Insights at Human Interest. “Whether you work at an office desk or at afactory, you shouldn’t have to be well-versed in all aspects of finance to plan for your future.”
Forty-four percent of all respondents said they’re participating in their company’s retirement savings plan, with 30-64-year-olds more likely than 18-29-year-olds to do so (48% vs. 39%).
Those working in finance and insurance rely on their company’s retirement plan more than other industries (54%), while construction workers were least likely to use their company’s plan (38%). And nearly 3 in 4 (73%) of employed respondents said they wish their employer provided better 401k guidance and education.
“Our results showed that 70% think they’d have a better 401k with an office job, suggesting some employers may be unaware of how to improve the retirement plans they offer,” Phillips added. “There are affordable options for companies of any size to automate their 401k processes and take some of the guesswork out of saving for retirement for both themselves and their employees. In fact, when given access to a 401k, our 2020 in-house study found that employees working in manufacturing and other underserved industries are nearly as likely to use their 401k.”
Industries with the Highest 401k Enrollment
• Financial/insurance: 54%
• Technology/computer science: 53%
• Health, medical, fitness and/or wellness: 50%
• Education: 50%
• Manufacturing: 47%
• Construction: 38%
Source: Human Interest
SEE ALSO:
• A Better 401k Cited as Top Reason to Switch Jobs
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
Brian, interesting information about workers willing to change jobs for a better 401k option. Not surprisingly, younger employees are interested in digital currency as an investment option. Surprisingly only 44% take advantage of the 401k opportunity. Most 401k options. have a match, which means employees are leaving money on the table. I have found that lack of education about the 401k is a main reason for the low participation rate. Thanks for providing us with this little-known information.
Brian, it would also be wonderful if ROTH 401k was offered alongside all regular 401k plans. When employees are young the taxes would be minimum for a ROTH>