The number of employees participating in employer-based retirement plans increased in 2013 for the first time in several years, pointing to a national economy slowly mending itself and an increasing employment rate in the aftermath of the recession, the Employee Benefit Research Institute says. Projected savings targets for health care needs in retirement, meanwhile, are down, according to EBRIs latest estimates.
Among all U.S. employees last year, 51.3% worked for an employer or union that sponsored a retirement plan, while 40.8% participated in a plan, according to EBRI research.
The report points to some demographic factors that could better help employers when targeting populations for retirement savings campaigns.
Being white was associated with higher probabilities of participating in a retirement plan, EBRI notes. Hispanic wage and salary workers were significantly less likely than both white and black workers to participate in a retirement plan, although native-born Hispanics were more likely to participate than non-native born Hispanics.
Additionally, the overall gap between the percentages of black and white plan participants narrowed when compared across earnings levels, with blacks surpassing whites at the income level of $75,000 or more, the report notes.
Retirement plan participation by workers is tied to macroeconomic factors such as the labor market, in addition to various demographic factors, said Craig Copeland, senior research associate at EBRI and author of the report. Other underlying factors also have an impact, but higher employment generally leads to higher levels of retirement plan participation.
Projected savings targets American elderly need to cover their health care costs in retirement, meanwhile, continue to decline, due in part to enhanced prescription drug coverage under the Affordable Care Act, EBRI finds.
For a married couple both with drug expenses at the 90th percentile throughout retirement who wanted a 90% chance of having enough money saved for health care expenses in retirement by age 65, targeted savings fell from $360,000 in 2013 to $326,000 in 2014, according to EBRIs computer modeling.
Health care savings is an evolving theme, says Kevin Crain, senior relationship executive for Bank of America Merrill Lynch.
Companies are continuing to aggressively move toward health savings accounts. I kind of think HSAs are the 401(k)s of 20 or 30 years ago, he says.
Crain says that as HSA balances continue to grow, companies are beginning to look at them in combination with the 401(k) plan and develop education programs that help employees understand how both accounts contribute to overall retirement security.
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