Results from the seventh annual Transamerica Retirement Survey reveal that the ongoing national dialogue surrounding Social Security may be making a strong impact on Americans' attitudes and behaviors towards retirement savings, resulting in workers saving more and employers placing higher value on retirement plans. 

Survey data shows that average contribution rates to 401(k) plans have increased from 8.4 percent in 2004 to 9.9 percent in 2005 and that more employees are saving for retirement outside of the workplace (66 percent in 2005 versus 58 percent in 2004).  In addition, 79 percent of employers say their employee-funded retirement plan offering is important to their ability to attract and retain employees versus 75 percent in 2004.

"We've seen a dramatic increase from last year in the importance that both workers and employers place on retirement savings," said Catherine Collinson, retirement and market trends expert for the Transamerica Center for Retirement Studies. "People are becoming much more realistic about retirement and it's translating into action."
 

According to the survey, workers place more value on retirement plans than in previous years, especially when it comes to controlling their own savings. For example, 74 percent of respondents view a 401(k) or other employee-funded retirement plan as very important, while 61 percent feel that way about defined benefit pension plans.  These numbers show an increase from 2004, when the figures stood at 66 percent and 46 percent, respectively.

"Clearly, the increased value that workers place on company-sponsored retirement plans is correlated with the high level of public concern about the future of Social Security," adds Collinson.  Another Transamerica survey from earlier this year found that 80 percent of Americans consider themselves informed about the current Social Security debate, supporting the conclusion that retirement savings are at the forefront of many workers' minds.

Workers realize they have challenges ahead, along with an increased awareness of retirement comes a dose of reality.
For example:

    -- More workers now estimate that they will need to save more than $1 million on average to feel secure in retirement (33 percent in 2005 versus 25 percent in 2004).
    -- Workers have also increased their estimated retirement age, from a median of age 63 in 2004 to a median of age 65 in 2005.
    -- Confidence in retirement savings is down, with only 23 percent of workers feeling very confident that they will be able to retire comfortably versus 31 percent in 2004.

Survey data also shows that 44 percent of participants don't believe they are building a large enough retirement nest egg. Of those, 67 percent say it is because they cannot afford to save more, while 16 percent say they are in too much debt to do so.

"The drop in confidence is a sign that workers are realizing they are going to have to be much more proactive in preparing for retirement and recognize the challenges in doing so," said Collinson.  "Almost everyone needs further education on retirement savings and now is the time to approach the
procrastinators who are still in denial."

More work remains

Despite these improvements, survey data shows there is still much work to be done.  Though savings rates and contribution rates have gone up, participation rates have dipped slightly (from 76% in 2004 to 74% in 2005). Further, 24 percent of workers indicated that they don't know how much they'll
need to have saved for retirement while 33 percent of those who do know indicated that their estimated need was based on a guess.  Although workers, on average, are spending more time managing and monitoring their retirement accounts (10 hours per year versus 8 hours in 2004), this amount still remains low overall.
 

In addition to worker and employer data on retirement investment attitudes and behaviors, the seventh annual Transamerica Retirement Survey also includes breakdowns by generation, gender, and employer size.  Full results of the survey are available at www.ta-retirement.com/thecenter.