Retirement and the American Worker

Data used comes from:


6thAnnual Transamerica
Small Business Retirement Survey
Summary of Findings
December 14, 2004
Final sample sizes and related precision levels (90% confidence)are:
!601 Employers, ± 3.4%
!1201 Workers, ± 2.4%

Employer-funded Retirement plans are losing ground--especially fast among small Employers (Only 23% of small companies offer this type of plan in 2004, compared to 32% in 2003.) 78% of Employees report their Companies offering a Employee-funded plan--73% offering 401(k) plans. Employee involvment in such plans range in the mid-70s percentile, with two-thirds of the remaining Employees planning future enrollment. Workers average contribution to their Retirement plan averages 8%, with about 37% contributing over 10%. Most Employees (at least 50% of all Workers, over 80% of Baby Boomers) state that Company Match into the Retirement plans is important.


The majority of workers expect the U.S. economy to stay the same(28%) or get better (45%) in the next year.!However, male workers are significantly more likely to feel it will get better (53%) than female workers are (35%).–Even more workers feel that their personal financial situation will stay the same (35%) or get better (57%) in the next year.!As with the economy, females are less likely than males to feel their personal finances will improve in the next year (51% vs. 61%).!

Employers overwhelmingly feel they are meeting their Obligations toward their Employees' Retirement plans, while Employees are less confident. Employees feel excellent benefits are a greater inducement than high salary alone, while Employers are less likely to possess this attitude. Health insurance still remains the benefit most desired by Employees, and understood by Employers. Employers overvalue giving Employees investment options, while Employees want more financial disclosure about their Retirement plans.

The majority of Employees do not rely on their Retirement plans alone, but invest in other venues for their retirement. Most Employees do not use rational (systemic) planning to compute their Retirement needs. Almost all Employees also expect to retire with more accumulated assets than their current retirement savings would seem to indicate--possibly indicating their outside financial planning is relatively large, disputing standard Economic expectation on American Savings ratios.

it could be that Americans' failure to save is caused by mechanics, not morals. At least that is one conclusion of a recent paper by four economists: David Laibson and James J. Choi of Harvard and Brigitte C. Madrian and Andrew Metrick of the University of Pennsylvania. (NYTimes, Daniel Gross)

The above cited article says participation rates in 401(k)s increase significantly, if participation is made the default choice. Labor is not against saving, nor are they spending animals; they simply feel Investment decisions should be made for them, by Professionals. One Economist cited in the article, PROFESSOR LAIBSON, suggested income tax rebates should be automatically channeled into Individual Retirement Accounts.

This Author adopts another stance: suggesting standard economic modeling does not reflect modern Household savings methods. Standard models consider Housing purchases as consumption, while most Households today purchase Housing above natural Rental costs--as a long-term investment. High numbers of Households invest in Mutual and Index Funds, which Economists discount as Savings--accounting as Venture risks, while Households think of these Funds as differianted Bank savings accounts paying higher Interest rates. The proliferation of franchise Business forms are Household attempts to locate higher-paying forms of Savings. Economists, and their Models, are simply behind the times. lgl