The Retirement Plan Advantage

It should come as no surprise that having a retirement plan at work makes a big difference – but you might be surprised at just how much.

According to the 27th Annual Retirement Confidence Survey (RCS)  from the non-partisan Employee Benefit Research Institute (EBRI) and Greenwald & Associates, workers who participate in a retirement plan are 10 times – 10 times – more likely to be currently saving for retirement (74% with a plan vs. 7% without). Moreover, these workers have significantly more in savings and investments than do those without a plan. While two-thirds of workers without a retirement plan (67%) report having less than $1,000 in savings and investments, that was the case for less than 10% among workers with a retirement plan.

Workers reporting they or their spouse participate in a DC plan are significantly more likely than those who do not participate in such a plan to have tried a calculation (49% vs. 15%).

Stressed ‘Test’?

About a third (30%) of workers say that they worry about their personal finances while at work, and more than half of these workers believe they would be more productive at work if they didn’t spend time worrying.

In addition, stressed workers (63%) are more than three times as likely as unstressed workers (17%) to report that they worry about their personal finances while at work.

However, just a quarter of workers with a retirement plan (26%) report feeling stressed about retirement preparation, compared with about 4 in 10 workers without a plan (43%) who feel stressed. In keeping with overall retirement confidence, workers who have a retirement plan are also more likely to feel they are financially secure; 7 in 10 workers with a retirement plan feel they are at least somewhat financially secure, while only a third of those without a plan feel financially secure.

Workers who have a retirement plan, whether a defined contribution plan, defined benefit plan or IRA, are far more likely to feel confident about having enough money for retirement. Workers reporting they or their spouse have money in a DC plan or IRA or have benefits in a DB plan from a current or previous employer are more than twice as likely as those without any of these plans to be at least somewhat confident (71% with a plan vs. 33% without a plan).

That said, apparently the mere process of preparing for retirement is stressful for some workers, as 3 in 10 workers report feeling very or somewhat mentally or emotionally stressed about preparing for retirement. By comparison, 22% of retirees recall being mentally or emotionally stressed about preparing for retirement before they retired. Not surprisingly, workers who feel stressed about retirement preparation are notably more likely to say that their debt level is a major problem (30% versus 12% of those who do not feel stressed).

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