Eighty percent of employers that stopped contributing to employees’ 401(k)s in 2009 plan to restore company matches by the end of this year, according to Hewitt Associates.
At the same time, theResearch Institute (EBRI) reports that 24% of workers approaching retirement age have decided to keep working longer than they planned.
Blame the recession. “In the last 18 months, employees’ 401(k) accounts took a serious financial hit due to the severe market downturn,” says Pamela Hess, Hewitt’s director of retirement research. “Some of them also lost the additional retirement savings that their 401(k) employer match provided.”
EBRI research shows that 42% of workers age 45 and older have savings and investments under $25,000.
Hewitt’s study of midsize to large U.S. companies reveals 54% of employers aren’t confident their workers will retire with enough money to last the rest of their lives.
To make it easier for employees to amass adequate retirement savings, Hewitt recommends that employers:
- Automatically enroll employees in 401(k) plans. Fifty-nine percent of employers offer automatic enrollment, up from 51% in 2009.
- Offer plans with automatic account rebalancing—a tool that helps employees regularly balance their portfolios with their target allocations. About half of all 401(k)s have automatic rebalancing.
- Build in automatic contribution escalation, allowing employees to elect to have their contribution rates increase automatically over time.
- Provide investment services and tools to help employees make better financial decisions.