Among uncovered workers in California, six in seven think that a retirement savings program that automatically enrolls them but gives them the option not to participate is a good idea, but the potential opt-out rates are higher than typically seen in the private sector.
According to the “Online Survey of Employees Without Workplace Retirement Plans,” conducted on behalf of the State of California by Greenwald & Associates, about a quarter would opt out regardless of whether the deferral rate is 3% or 5% — considerably higher than the opt-out rates reported for private sector workplace retirement plans (generally reported as being under 10%). Retention rates in the program are higher for women than for men (77% vs. 71%), and the likelihood of staying in the program also increases as personal income goes up, though the survey found no statistically meaningful differences in retention rates by Hispanic status or age.
Another one in five (18%) would stay in the program but would ask to have their deferral rate changed. Of that group, roughly a third would ask for a lower deferral rate of 3%, while just over 4 in 10 with a 5% deferral rate would ask to have that lowered.
Moreover, a third would ask their employers to stop annual increases of 1% annually up to a maximum of 10%. About a third would not participate if they cannot access their money if they become seriously ill (32%) or if their spouse dies (32%), and about a quarter would require, as a condition of participation, being able to access their money in the event of a job loss (28%) or a family member becoming seriously ill (26%).
Trusted Advisors
There also appear to be trust issues: While 17% strongly agree that professional financial advisors are trustworthy when it comes to managing and investing workers’ retirement savings, just 13% felt that way about the state government (and 15% about the federal government). Similarly, 39% somewhat agreed with that assessment as applied to financial advisors, just 22% as applied to the federal government, and only 24% as applied to the state government.
And while one in five (21%) are very confident they know how much they need to save for retirement, and 40% are somewhat confident, more than half are currently saving less than 5% for retirement, including 29% who are not saving anything. Four in 10 say a major reason is that they are more focused on their family, and nearly as many (36%) report that dealing with unexpected expenses is a major reason they don’t save more. Two-thirds could contribute less than $100 per month.
