Americans have an eye on the future and retirement. Many workers view employer contributions as one of the most important components of their benefits offering.
Americans have an eye on the future and retirement. Many workers view employer contributions as one of the most important components of their benefits offering, according to a new study from Fidelity.
Approximately 80% of workplace savings plans offer some type of employer contribution, which is, on average, 4.3%. According to Fidelity’s data, employers contribute an average of $3,450 per employee annually, which is more than $1,000 higher than 10 years ago.
The survey found 43% of workers would prefer to have a lower compensation in return for a higher employer contribution to their 401(k). The results showed workers were more likely to accept a position with a company match. Only 13% would take a job with no match, even if it came with a higher pay level.
“Employer contributions play a vital role in helping Americans reach their retirement savings goals — these contributions represent more than 35% of the total contributions on average to an employee’s workplace savings account,” Doug Fisher, senior vice president of Workplace Investing at Fidelity, said in a statement.
He added that Fidelity recommends a total retirement saving rate between 10% and 15% of salary to ensure employees have enough for retirement. However, many Americans will only reach that savings level if the company matches employee 401(k) contributions, Fisher said.
Roughly one in 4 (42%) of respondents indicated the 401(k) plan is their sole source of retirement savings. With personal and retirement savings expected to fund a large part of retirement income, Fidelity recommends saving enough to replace 85% of net final pay.
A separate survey from LIMRA found 78% of workers recognize their personal responsibility to save for retirement. More than three-quarters of respondents believe that all workers should have access to a retirement savings plan at work because it is an effective way to save for retirement.
The LIMRA survey found 3 in 10 workers expect their defined contribution plan would represent their primary source of retirement income.
"It is encouraging to see that so many Americans understand that their action - or inaction - during their working years can determine their financial security in retirement," Alison Salka, senior vice president, director LIMRA Research, said in a statement. "Systematically saving throughout one's career is essential for the majority of Americans to attain their preferred retirement lifestyle once their working years come to an end."