The majority of employees would be willing to give up 5% or more of their salary if it meant having reliable income to help them live comfortably during retirement, according to data released today by Bank of America Merrill Lynch.
When asked about the desire for a guaranteed source of income during retirement, 82% of employees said they’d be willing to give up 5% or more of their salary if it meant having a reliable income to help them live comfortably during their later years; 42% said they’d be willing to give up 10% or more of their salary.
“This was a surprise. Employees have gotten aggressive about their need and desire for guaranteed income in retirement and are even saying they will give up something currently — a certain level of income — to get a good guaranteed-income product longer term,” says Kevin Crain, head of institutional retirement and benefit services for Bank of America Merrill Lynch.
The 2012 Workplace Benefits Report surveyed 1,000 employees and 1,000 employers about their views on financial benefits.
Ninety-one percent of employees surveyed view their 401(k) as one of the most critical savings vehicles on their path to a financially secure retirement. Nearly half (46%) of employers, meanwhile, expressed concern over the possibility of a policy change that could reduce retirement savings tax incentives for employees participating in these plans.
The 401(k) system has come under scrutiny recently, with a report from think-tank Demos arguing the defined contribution system should be scrapped entirely and replaced with a new system focused on low-cost and guaranteed returns. Still, Crain believes that while more work can be done to strengthen 401(k)s, “it’s paramount because of the employees’ view of the importance of this benefit,” he says. “It’s paramount that corporate benefits leaders and ourselves, together, work to improve this, make it easier in terms of its use, make it more healthy and vibrant.”
When asked what would encourage them to save more in their 401(k), employees cited an increase in company match (89%); more affordable health care benefits (73%); greater access to education and advice about saving and investing in the plan (53%); and a higher maximum contribution limit (46%).
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