EBRI EMPLOYEE they do not plan to buy anything (51 percent), and tend to Ve carry t3, credit Som card ewhdebt at (67 Not percent). Too Over Not at half All • Havinga A number Demand large offrom different portion employees. of factors workers motivate who are people seasonal, to save part fortime, retirement. or high 46Reasons turnover cited was cited by more by 19 than one have Small doneemployers lhis calculation. offering Curiously, retirement Statehowever, m plans ent tend of those to Dal employ l who as have L.different Sali done sburthe y types calculation of workers arethan onlythose slightly that do Small Biz Retirement Quiz Scores Plan Sponsor Nonsponsors similar prciportions say they changed the amount they were contributing to a retirement savings plan (40 While only three-m-ten retirees say they have BENEFIT worked for pay since they retired (29 percent), an tlow believes coJ(fi that dent they arewill you have that: enough money to live comfortably Confidentthroughout Cot(fidetheir nt retirement Cot_dent years Co(56 nfidetz: percent in • five 6 Availability work as orthe 7ers correct most for of important giving answers easy-to-understand them reason a lot for of motivation not information. sponsoring are: a plan. 26% An additional 44 17 percent 19% said employee more not sponsor likely than a planthose their who employees have not to tend be to able be to older, provide havethe higher correct earnings, age at which have more they will formal be education, eligible percent) or changcd the allocation Employee of their money Benefit in a retirement Research savings Institute plan (41 percent). In addition. The Changin_ Nature of Retirement T-120 You Mrwill . Chairmen have enough and members money tooflive the comfortably committee: RESEA I RC am H Dallas Salisbury, president and CEO of the increasing proportion of workers indicate they expect to work for pay in retirement (68 percent, up from percent) despite ttle fact that a similar proportion has accumulated less than $25,000 towards their and preferences • tend 3 Lengthening to to5remain for correct wages with of answers and vesting the /orcompany other requirements. benefits longer.was the most important 62 reason. 33 Therefore,62 36 percent of for full benefits from Social Security. those who reported receiving employer-provided materials are more likely than others to have also American Savings Education Council throughout • Feeling your they retirement could not years: count on Social Security24% (53 percent) 47% 20% 8% INSTITUTE _,o Many of today's workers will not be eligible to receive full benefits from Social Security until they Employee Benefit Research Institute (EBRI), a nonprofit research and education organization in 61 retirement percent in (541998). perccnt). Both workers and retirees are most likely to identify enjoying work and wanting to those ,, without Other. plans cited some sort of employee-related reason as the most 10 important reason for not reported Updoing to 2 correct a retirement answers savings needs calculation. 11 l 9 You will tlavc cnough money to take care of your • Starting to earn enough money to be able to save (49 percent). Before the Senate Special Committee on Aging, June 17, 1999 are In 67,addition but few , while respondents three-fourths are aware say that they an have increase established in the an normal investing retirement or savings age for program Social for Security their is Washington, DC. 1also serve as chairman and CEO of the American Savings Education Council stay involved as a major reason for working in retirement (64 percent and 62 percent, respectively). Yet offering a plan. A_c oj'Most Full-Time Employees Plan Sponsor No Plan basic cxpenscs during your retirement: 34 49 12 4 Deniers • Having (13 percent seen people of Americans) not prepare feeland, it istherefore, pointless to struggle plan for in retirement retirement (59 (48 percent) percent). and, more currently retirement Personalitybcing (74 Types percent) phased in, andfrom seven-in-ten age 65 toare 67.saving A majority for retirement of workers (70 expects percent),tothe reach amounts full eligibility accumulated workers, (ASEC), a more coalition so than of retirees, private- also and public-sector say major reasons organizations they will that workaims in retirement to raise public are toawareness keep health about You Whv are do doing small a good cmployers job of that preparing sponsorfinancially retirement plans voluntarily choose to provide this benefit? Under agc 30 11% 23% The findings indicate that, on deciding to sponsor a plan, a small employer then turns to the • The availability of a retirement plan at work (48 percent).; than any other group, they think retirement planning takes too much time and effort (35 percent). Many sooner Summa than ry they actually will (59 percent). Many of these incorrectly expect to be eligible for full what by workers is needed as ato whole ensure arelong-term generally personal unimpressive. financial Onindependence. average, however, ASEC those is an who affiliate have done of theaEBRI needs insurance and other benefits (37 percent vs. 16 percent), to have money to make ends meet (37 percent for your retirement: 25 51 16 8 Twelve percent said the most important reason was that it cost too much to set up and administer a Several reasons are cited by those that do, but the top two are: a) the positive effect on employee attitude An30 analysis 39 years of the workers and retirees in the 1999 RCS reveals that there are 62 five distinct 51 groups of knowledge and expertise of an outside professional to implement and run the plan. So a lack of are impulse • Realizing shoppersthat (42time percent), was running frequently out to setprepare back from for their retirement financial (39 goals percent).; (68 percent), or benefits Education calculation • While at and age conventional have 65 Research saved (37 percent considerably Fund. wisdom of all maintains workers), more than that but those low some plan who believe sponsorship have not theydone will rates the be among eligible calculation. small even employers before age are 65 You will have cnough money to support yourself in vs. 26 percent), and to be able to afford extras (36 percent vs. 26 percent). Workers not confident they plan. Americans Ten percent who fecl said very thedifferently most important about reason their attitudes was thattowards required their company finances contributions and towards are plamling too and pcrtbmlance, Ages 40 andand older b) the competitive advantage for the company in employee 24 recruitment 25 and knowledge may not be as large a deterrent as the reasons discussed earlier--employers learn what they • Thc advicc of a financial professional (24 percent). unwilling to take any financial risks no matter what the gain (46 percent). Half of this group is not retirement, no matter how" long you live: 19 5l 19 9 (22 percent driven of by all high workers). administrative Almostburdens two-in-ten and workers cost placed say on they small do not employers, know when the they 1999 will Small be Employer eligible will have enough money for their retirement and those with lower household incomes are particularly expensivcl; for retention. retirement. Thus, for 3 As in percent, shown many the cases by their most , there scores important are direct on the reason business Retiremen was benefits t"too Readiness many to the government Rating employer , Planners regulations." from sponsoring appear to be a the need to know when they need to know it. It is clear, however, that the majority of small employers confident You I am will • accompanied have A about family enough having event, by money enough Mathew such to as money take Greenwald, marriage, care to live ofbirth your president comfortably of a child of Mathew in or retirement parents' Greenwald retirement (50 percent) & Associates (21and percent). four-in-ten (MGA), are a Amount Accumulated for Retirement by Workers to receive full benefits from Social Security (19 percent). Only 16 percent are able to give the correct Retirement Survey (SERS) findings reveal that this view of the world is often too simplistic. In fact, likely to identify these other reasons. Therefore best prepared , 25 for percent retirement, ofnonsponsors followed cited by Savers, a cost and Strugglers, /or administration-related Impulsives and Deniers. reason as the most retirement plan. Annual Salao' o[Most Full-Time Employees Plan Sponsor No Plan without medical plans expenses are largely whenunfamiliar you retire.with the plan options 17 that have been 43 created specifically 25 for them. 13 not even confident of having enough money to take care of basic expenses (40 percent). survey research finn in Washington, DC. EBRI, ASEC, and MGA sponsor the annual Retirement All Done Needs Not Done Needs age at nonsponsors which they report will bcthat eligible employee-related for full benefits reasons and five and percent revenue believe uncertainty they will are often be eligible more important later than important Ove_vhehningly, Less reason than $20,000 for not non-savers offering are a plan. most likely to say having too many current 9% financial responsibilities 32% Retirement Readiness Rating by Personality Type This likely changes when they decide to sponsor a plan, but not before. Confidence Survcy (RCS), and this year, for the second time, sponsored the Small Employer Retirement they actually will be. reasons for not sponsoring a plan. This helps explain why actual coverage remains low despite Should workers be as confident about their retirement as they are? Perhaps not, based on results of Imp Today's lications Amount retirees are most likely to rely on Social Workers Security orCalculation employer-provided Calculation money as their most is a major reason they do not save for retirement (66 percent). Other reasons that workers give for not $20,000 $40,000 73 58 RRR Planners _;avers Strugglers hnpulsives Deniers Survey (SERS). It is our pleasure to be here today to release to the Congress these full surveys, details repeated public policy initiatives designed to boost retirement plan coverage among small Imp the lications Retirement for Readi theness SmallRating, Employer whichIss we ue have unveiled just this week. The Retirement Readiness important So, while source cost of and income administrative in retirement. issues Just do matter, two-in-ten they retirees are not find the sole that reason their personal for low savings plan are savingOver are: $40,000 11 8 Potential Nothing Motivators for Retirement Plan Sponsorship 9% 4% 14% In general, the earlier respondents are planning to retire, the earlier they believe they will be eligible Very Americans good (21-25) continue to be more 16% focused on 10% retirement planning 2% and saving, but 1% this focus has 0% not of which are in the testimony that follows. In the interest of time, we will concentrate on the Small Statement Before the Senate Special Committee on Aging employers. Rating is designed to indicate how well individual workers are preparing for retirement. The scale runs their mostLess important than $5,000 source of income. In contrast, 8 half of current workers 4 expect personal 10 savings to be sponsorship Good (16-20)rates among small employers. 46 In fact, 34 based on small25employer responses, 17 they are not 11the for Major full benefits driversfrom of low Social retirement Security. planForty-three sponsorshippercent amongofsmall workers employers are planning are who to retire they employ before age and translated inlo increased confidence. While most are saving, many still have no idea how much they Employer Retirement Survey. I ask that my full statement be entered into the written record. • Having other savings goals, such as a house or education (36 percent). Tile potential exists for increased plan sponsorship. from 0 to 25, with those scoring 25 apparently doing the best job of preparation. The items used to $5,000-$9,999 7 5 9 their Okaymost (11-15) important source of income 26 in retirement. 42 Only one-in-five 39 expects to rely 36 most on employer- 21 most important reasons for the majority ofnonsponsors: employee-related reasons are most often cited 65. Educatio Of these, nal one-fourth Level of Most believes Full-Ti they mewill Employees be eligible four or more yearsPlan before Sponsor they actually No Plan will be (25 the uncertainty of revenue flows. While issues of administrative cost and burden matter, they are only need • Nonsponsors to save. The report majority that of the alltwo workers, items whether most likely already to lead saving to serious or not,consideration admit they could of sponsoring do more. a • No retirement savings plan offered Hearing at work (31on percent). $10,000-$24,999 11 9 14 Poor (6-10) 9 11 20 32 36 compute the score for each worker include saving for retirement, completing a savings needs calculation, provided money and only one-in-ten expects Social Security will provide their most important source of as the most important factor for not offering a plan, and business profitability is also a main decision- High school or less 41% 58% percent), part of the almost puzzlc. three-in-ten Therefore, think the solution they willisbe not eligible simply one "build to three it and years they earlier will come," than they by creating actually will These plan findings are an indicate increase progress in profits that and has business been made tax credits since the for starting 1998 National a retirement Summit plan. on Retirement The latter may $25,000-$49,999 Initiatives to Educate the 10 American Public 8 About 11 Vew poor • Expecting (0-5) to have a pension 2 (26 percent).3 13 15 32 Likelihood of Starting a Plan in the Next Two Years establishment of an investing or savings program for retirement, and attitudes towards various aspects of income. Not surprisingly, expected reliance on personal savings as the most important source of income driver. This may explain why plan sponsorship rates remain low despite repeated legislative efforts to be (29 Some percent), college and 17 percent do not know when they will be eligible for full35 benefits. Just 31 11 percent simpler be viewed and simpler as substitute small-business for the former; retirement i.e.,plans. the government Rather, it is cannot build improve it and they thewill profitability come once of the a $50,000-$99,999 12 15 8 Savings, but they still make clear the need for continued focus on educational efforts leading up to the • Lots of time remains until retirement (24 percent). the Importance of Retirement Savings Very likely 15% 1999 SERS Findings preparing for retirement. increases as age decreases, while expected reliance on Social Security increases as age increases. boost them] of those planning $100,000 to orretire more before age 65 are able to 16give their correct 26 eligibility age. In contrast, 6 18 business 200l PlaCollege n National ners reaches (35 degree Summit. a percent certain or more oflevel Americans) of profitability believe and anyone stability, can have and once a comfortable retirement 20 retirement planning if and they 9 saving just is business, but it could subsidize the costs of starting a retirement plan for a small employer's workers. • Not knowing where to start (18 percent). Somewhat likely 24 Don't know/refused 28 29 27 Based on thc results of this scale, less than one-in-ten American workers appears to be doing a very percent of those planning to retire at age 65 and 24 percent of those planning to retire at age 66 or later plan and savc (90 percent). This group is composed of disciplined savers (86 percent). They always more of a priority for the small employer's workers. It is at that point that the new vehicles created by Obstacles to Plan Sponsorship • Social Security will take care of them (16 percent). Not too likely 24 Expected and Actual Most Important Source of Retirement Income • Many small employers without plans are unfamiliar with the different types of retirement plans Median $29,514 $66,532 $14,054 give C research good omparati th job eir and ve correc of preparing plan Pro t eligibili fi for les:big for tCompanies ypurchases retirement age. (78 With (8 percent percent), Retirement with enjoy a score Plans financial ofand 21 planning to Those 25). Without Three-in-ten, (77 percent) Plans and withare a willing score of to Leng_th of Time Most Full-Time Emplo_,ees Stay With Company Plan _)onsor No Plan policymakers specifically fox small employers will begin to realize their full potential. • Being unable to find savings information that they understand and trust (15 percent). Not at all likely 36 According to the 1999 SERS, there are a number of reasons why more small employers do not offer available to them as potential plan sponsors, even those plans created specifically for small Expected Actual take substantial financial risk for substantial fnancial gain (42 percent). Approximately three-fourths 16 to 20, appear to be doing a good job (31 percent) and a similar proportion appear to be doing an okay Less than 3 years 8% 27% Sm While all• Not emplo the median being yers confident th amount at sponsor saved in their retirement increases ability plans to bymake age tend (25-39, good to bedecisions distinctly $20,588; about 40-49, different saving $45,238; from (13small percent). 50-59, employers $71,250), by Nearly hal f of today's workers expect to retire at age 65 or later and 5 percent expect they will never retireme employers. nt plans--it is not simply a matter of administrative cost and burden. Cost and administration- job are confident (32 percentthey with arcscore investing of 11their to 15). retirement Two-in-ten savings appear wisely to be(73 doing percent). a poor Not job surprisingly, (19 percent with almost score Income Source (% of workers) (% of retirees) As Between the survey 3 and shows, 9 years 39 percent of small employers without plans say they 56 are very or somewhat 45 without plans, in tern_s of revenue levels and the composition of their work force. These findings bolster workers ages 60 and older have accumulated Dallas lessL. ($39,286)--perhaps Salisbury because they are more likely to be retire. Those In contrast likely totostart these a plan cxpectations, are somewhat however, more most likelyretirees to report report that actual the most retirement importantages reason younger they related issues do matter, but for many small employers they take a back seat to other issues. For some, Almost six-in-ten workers who are not currently saving for retirement say that it is reasonably of nine-in-ten 6 to 10) and are confident onc-in-ten that seems theytowill be doing have enough a very poor # money ## job to (10 live percent comfortably with a score in retirement of 0 to 5). (88 Not 10 years or more 31 24 likely toPersonal start a plan savings in the(net) next two years; with changes, this number 49% could be expected 18%to rise. Long- • For the past threc years, approximately one-fourth of American workers have reported they are very the finding above that low coverage rates are driven by more than just issues of administrative cost and than expecting age 65 to . rely President on Social Security and CEO, for a Employee major portion Benefit of their retirement Research income Institute . To put these don't currently have a plan is revenue uncertainty and less likely to say it is because a large portion of the main driver is the financial reality of running a small business, i.e., their revenue is too uncertain to surprisingly, possible for them those to with savehousehold $20 per week income for of retirement $75,000 (57 or more percent). are more In addition, likely toseven-in-ten score highly, workers but those percent), almost Money all respondent believe theyput will into have a retirement enough money plan to take care 32 of basic expensesl 0(95 percent), and term solutions to increased coverage among small employers include: education of workers, so that they burden. confident of having enough money to live comfortably in retirement, and approximately 45 percent accumulations in perspcctive, assume a single male, age 65, purchases a life annuity today) With their workers are seasonal, part time, or high turnover. It therefore appears that they feel continued Chairman and CEO, American Savings Education Council commit to aat pla work n. For others, the most important reasons for not sponsoring a plan are employee-related, more who who are are than married, already three-fourths saving those who report believe work that they for it will is businesses possible have enough for with them more money to than save to take 100 an additional employees, care of medical $20 and perthose expenses weekwho (69(76 expect percent, What view retirement Do Small planning EmployersandKnow saving About as a personal Retirement priority Plans? and communicate their desire for a retirement have reported that they are somewhat confident. There are several reasons, however, for believing $71,250 he could purchase Expected a nominal and monthly Actualannuity Retirement for life Age of $631. The median amount saved for improvement in their business conditions will allow them to start a plan within the next couple of years. e.g., it is notOa ther prior personal ity for asavings, n employer's not including workers, work- or the employer's17 work force has such 8 high turnover to rely primarily on personal savings (either through a retirement plan at work or outside of work) or percent). up from 57 percent in 1998). Among those who say they could save this $20 per week, 12 percent say plan to their employer; ongoing good economic conditions, so that business profits and the affordability that many are falsely confident. Only half of all workers have tried to determine how much they will Small employers that offer retirement plans tend to have higher revenues than small employers that do workers ages 60 and older--$39,286--would produce a monthly annuity of $348. Many nonsponsors related retirement are unfamiliar plans with the different retirement plan types available to them as that it does not make sense to sponsor a plan. Expected Actual employer-funded plans are also more likely to score highly. they would not have to give up anything to do so. Those who would have to sacrifice are most likely to of plan needsponsorship to save by the improves; time they or, as retire, the survey and justindicates, 16 percentpolicy report changes having such accumulated as simplification $100,000 and or tax more Savers (18 percent of Americans) are very much like planners. They are disciplined savers (88 not have Employer-funded retirement plans. plans 20 30 potential plan sponsors, especially Employee the options Benefit (o_ created of workers) Research specifically Institute for (_ small of retirees) employers. Most In addition, nonsponsors reporting that they are likely to start a plan in the next two years are generally say they would cut back on dining out or entertainment. credits that help make plans more affordable. We do not say this to endorse policy changes, as that is Finally, for rctircmcnt. Social workers Security planning In addition, to retire many earlier consider are themselves generally better saversprepared 12 rather than thaninvestors those who 39 and are report planning risk- to percent), many research and plan for large purchases (80 percent), and most enjoy financial planning (67 The Retirement Readiness Rating only partially confirms respondents' self evaluations. Although 2121 K Street NW, Suite 600 nonsponsors more familiar Age said 54with orthey younger different have never plan heard types than of or are are those not5too notfamiliar likely to with startsavings a20 plan. incentive They also match scoreplan slightly for Reasons for Not OfA, ring a Retirement Plan Most Important Ma,ior advcrsc behavior. Employment 11 3 not our role; rather, it is to make clear that there are actions Congress could take to expand small retire at age 65 or later. percent). But they are more cautious than planners--almost all pay offtheir credit cards at the end of those Approximate who Age are 55very to Gross 59 confident Revenueabout in Previous having enough Year 13 money for retirement Plan 16 are more Sponsor likely than No Plan others to Washington, DC 20037 employees (SIMPLE) plans, created specifically for small employers. The same holds for simplified higher, • Revenue on average, is tooouncertain n the Small to Biz commit Retirement to a plan. Quiz. This provides some indication19% that their growing 50% Sale of home or business 5 2 The Role of the Employer employer plan sponsorship. every Less month Agc than 60 (95$2 percent)--and million their caution leads 13 to risk adverse behavior.6 Half 34%are not willing 63%to take Voice: 202/775-6300 score highly, only one-fourth scored in the 21 to 25 point range. Therefore, many of the workers who employee interest has pensions led thern (SEPs). to learnBy about comparison, the options very available. few nonsponsors said they have never heard of or are • Today's workers envision a retirement that looks different in many respects from that now • A Other large portion government of workers programs are seasonal, part time, or high turnover. 1 19 4 42 Median Amounts Accumulated by Expected Age at Retirement Ages 61 to 64 13 29 any financial $2 million risks, or more no matter what the gain (51 percent) and they characterize 48 themselves as savers, 18 not say they are confident about having enough money for retirement appear to be falsely confident. Fax: 202/775-6312 not too familiar with 401(k) plans. experienced by retirees. Current workers not only expect to work longer than current retirees • Employees prefer wages and/or other benefits. 17 53 Age Age 65 59 or younger 30 14 $76,563 Thc employer plays a major role in ensuring adequate retirement preparation. Most obviously, four- investors (93 percent). Still, they are confident about their retirement. A large majority believes they Workers are increasingly confident that Social Security and Medicare will continue to provide Not Reported 19 20 Percentage actually worked Very or before Somewhat retiring, Int Familiar emany rnet: say With http: they Plan //www.ebri.org planType to work for Likely pay after to Start theyPlan retire because Not Likely they • It costs too much to set up and administer. 12 30 Age Age 66 60 or to older 04 17 12 $41,912 in-ten Retiremenl of all workersReadiness report thatRating they exp by ect Confidence employer pr inovi Having ded mon Enough ey willMoney be a ma for jor Retirement source of income Plan T3,pe 1999 RCS Findings Never Heard Of Not Too Familiar With will have enough money to live comfortably (85 percent), will have enough money to take care of basic benefits of equal value to today's. Three-in-ten respondents say they are very or somewhat confident Never retire 5 NA enjoy 401(k) Age working 65 plan and want to stay involved. Today's workers are also 91% changing $23,438 their expectations 81% • Required company contributions are too expensive. 10 51 in retirement (40 percent) and the same proportion say it will be a minor source (41 percent). Even more SIMPLE plans 36% 20% expenses (92 percent) and are doing a good job preparing financially for their retirement (89 percent). that Social Security will continue to provide benefits of equal value in 1999 (30 percent) compared to Age 66 or older $19,375 All Very Somewhat Not about their sources of income in retirement. Current retirees are most likely to identify Social Profit-sharing plan 85 71 Making • TooRetirement many government Preparation regulations. a Priority for Individuals 3 32 important, however, 46 percent expect that money they put into a retirement plan at work will be a major Simplified employee pensions (SEPs) 46 24 For many retirees, this earlier retirement was not by design---over four-in-ten of today's retirees say just two-in-ten in 1996 (20 percent). Likewise, 33 percent say they are very or somewhat confident that RRR _core Workers Confident Confident Confident Securitr as their most important source of income, but current workers are most likely to say that SIMPLE plan 49 40 •Stru Vesting gglers requirements (20 percent of cause Americans) too much share money many to of gothe to short-term attitudes ofemployees. planners and 2 savers. They are 38 source of income and three-in-ten report it will be a minor source (31 percent). Further, the availability 401 (k) plans 3 12 they retired earlier than planned (43 percent). The youngest retirees--those born in 1933 or later--are While this is good news in that those planning to retire earlier are apparently building the financial Very The good findings (21-25) above raise the issue of 8% where we currently 26% stand in terms 3% of making retirement <.5% Medicare will continue to provide benefits of equal value in 1999, compared with 23 percent in 1999. persomd savings will be their most important source of income in retirement. SEP 39 22 disciplined • Don't savers know where (65 percent) to go for who information tend to research on starting and plan a plan. for large purchases (84 percent). 2 Cautious 5 of a retirement plan at work is credited by almost half of savers with giving them a lot of motivation to Good (16-20) 31 48 36 8 resources with which to do so, the fact that workers planning to work longer before retiring have especially likely to report retiring before age 60 or retiring earlier than expected. planning and saving a priority for American workers. The 1999 Retirement Confdence Survey (RCS), Still, at least two-thirds of current workers are not confident that each of these programs will continue to In addition, many small employers simply lack information, or are even misinformed, about • Benefits for the owner are too small. 1 17 in their behavior, they consider themselves to be savers rather than investors (94 percent). But the fact • More than four-in-ten workers report receiving educational materials or seminars about retirement Okay save (4 (11-15) 8 percent) and the lack of a plan 32is cited by three-i 17 n-ten non-savers 38 as a major reason th 33 ey do not Plans exist in which employers as plansponsors are not legally required to make contributions. For example, generally accumulated less than others is of particular concern, since these are the workers most at risk released by EBRI, ASEC and MGA earlier this week, addresses this and related issues. The RCS found provide benefits equivalent to those received today (69 percent and 66 percent). June 17, 199_¢ retirement What, then, plan options would lead and to what increased plan sponsorship plan coverage? actually Nonsponsors entails. The were 1999 read SERS a listcontained of items and a seven- asked that • they Other arereasons. frequently set back from their financial goals by unexpected events (69 12 percent) makes 17 Poor (6-10) 19 8 19 29 employer contributionsare not required with a 401(k) plan--the sponsor could choose not to match participant saveplaning (31 percent) and .saving in the past year from their employer. Four-in-ten of those who received some sort that If seven-in-t current workers en workers follow arethe confident pattern set thatby they today's will have retirees, enough manymoney are also for likely a comfortable to retire earlier retirement. than for involuntary early retirement. question Very them much poor true (0-5) /less falseconfident "quiz" regarding about their retirement retirement 10 plan prospects, sponsorship. 1 Although The three-fourths Small 3Biz Retirement believes Quiz they 30 will contributions if any wouldand make to pass them the seriously administrative consider costs sponsoring on to the plan. a retirement However,plan. if thePercentages 401(k) is established who sayas the a of educational materials from their employer say it caused them to begin (19 percent) or resume (21 planned Majorities andare many also will confident do so for about negative having reasons. enough money Four-in-ten for basic of today's expenses, retirees about who their leftfinancial the workforce Saving--and Not Saving--for Retirement SIMPLE plan,then company contributionsare required. covered topics such as the cost of sponsoring a plan, what an employer as sponsor can do, and what a have following enough would money leadfor them basic to expenses consider (77 plan percent), coverage:only six-in-ten are confident they will have enough Nineteen percent of nonsponsors said that the most important reason for not offering a plan was that percent) saving for retirement, while similar proportions say they changed the amount they were Ovcr four-in-ten workers report receiving educational materials or seminars about retirement planing earlier than expected say they did so because of health problems or disability (40 percent). Other preparations Several indicators for retirement, provideabout evidence havingsupporting enough money the fact to that support manythemselves workers may in retirement be falsely no confident. matter plan money sponsor to liveis comfortably required by law (59 percent). to do. Seven-in-ten workers report they are personally saving money for retirement (70 percent)--an revenue is too uncertain to permit the company to commit to a plan. One-half(50 percent) of all 2Thecontributing Small Business to a Job retirement Protection savings Act of 1996 plan created (40 percent) a simplified or changed retirement the plan allocation for small ofbusiness their money (100 in or a reasons how and saving long cited they infor the live, retiring past andyear about earlier from having than theirplanned enough employer are money (42 changes percent). for medical at theHalf work expenses. ofplace, those such who Most received as ofdownsizing those employer- who are or Even • though An increase the proportion in business of workers profits. who have tried to determine how 69% much they need to save by the increase from 63 percent who reported saving for retirement in 1998. A slightly larger proportion of The nonsponsors fewer views employees) expressed saidcalled that in this this the savings was statement a major incentive arereason solely match they those plan do of for not the employees sponsor author and a(SIMPLE) plan. should .not A SIMPLE be attributed plan can to the be either 3Assume retirement $9.41 buys savings an annuity plan (41 ofpercent). $1/year payable In addition, monthly those (McGill, who D.M.; reported K.N. Brown; receiving J.J. Haley, employer-provided and S.J. confident lmpulsives arc some (15wpercent hat confident of Americans) rather than think ve_' that v confident--that anyone can have is, athey comfortable should have retirement enough if money they if provided materials say they received brochures (50 percent) and another third received newsletters or closure time• they (14 Business retire percent), has tax increased credits family for reasons steadily starting (14since apercent), plan. 1996, and only other half work-related of current workers 67 reasonshave (12 tried percent) to .do Only this a While there were some differences in overall scoring to the quiz between plan sponsors and an individualretirement account (IRA) for each employee or a 401(k) plan. It is too soon to fairly evaluate the Employee workers Schieberrepor .Benefit Fundamentals t that Research they o an f P d Institute, /rivate or the Pensions ir or spothe use.EBRI Seventh are savi Education ng Edition for re (Philadelphia, and tirem Research ent (75PA: Fund, percUniversity entits ). officers, of Pennsylvania trustees, materials are more likely than others to have also reported doing a retirement savings needs just plan and save (86 percent), but few consider themselves to be disciplined savers (34 percent). In calculation magazines (31 (49 percent). percent inFour-in-ten 1999, compared of those withwho 32 received percent insome 1996). sortThose of educational expecting materials to retire before from their small everything proportion goes right. say they did so because they found they could afford an early retirement (14 percent). • A plan with reduced administrative requirements. 55 impact of SIMPLEplans on the small employer market. nonsponsors, it was not as great as some might expect. sponsors, Press, 1996). or other staff, or to the EBRI-ERF American Savings Education Council. The Employee Benefit calculation. fact, they are frequently set back from their financial goals (90 percent), frequently spend money when employer say it caused them to begin (19 percent) or resume (21 percent) saving for retirement, while age 59 or between the ages of 60 and 64 are more likely than those planning to retire later to say they • Allowing key executives to save more in a retirement plan. 52 Research Institute is a nonprofit, nonpartisan, public policy research organization which does not lobby or take positions on legislative proposals. 10 13 12 9 3 8 11 47 5