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The Value of the Benefits Package

February 27, 2015

A round-up of recent surveys and reports highlights the importance of the health and retirement benefits to the short- and long-term financial security.

Higher Ed Ahead of the Savings Curve

Findings from TIAA-CREF's Higher Education Survey indicate that college and university employees are more likely than average Americans to take action to save and plan for retirement. Among the highlights:

  • Forty-two percent of higher education employees have saved in an IRA, compared to 34 percent of American employees overall.
  • Thirty-six percent of college faculty and staff say they've met with a financial adviser, compared to only 22 percent of the general population.
  • Despite their above-average track record on retirement planning and saving, most higher education professionals are not in a hurry to exit the workforce, with nearly two-thirds (64 percent) of faculty and staff saying they plan to retire at age 65 or older. And, higher education employees are more likely to say they will continue to work part time during retirement compared to American workers overall (37 percent versus 31 percent).
  • One factor likely contributing to college and university employee retirement preparedness is that nearly three-fourths (73 percent) of college and university employees enjoy an employer match for retirement plan contributions. And, those who receive matches often get a substantial employer match-with 43 percent receiving a 5 to 8 percent salary match, compared to only 34 percent of the general population.
  • College and university employees are also less likely to take loans from their retirement plans (16 percent) compared to the average American worker (29 percent).

For more information, see the release "For Retirement Preparation, Higher Education Professionals Are at the Head of the Class."  See also the "TIAA-CREF Ready to Retire Survey Executive Summary." 


Save Early, and Often

A November 2014 report published by the Insured Retirement Institute details the importance of starting to save early in one's career. "It's Time to Save for Retirement: The Benefit of Saving Early and the Cost of Delay" calculates lifetime income for individuals who start to save for retirement at various ages of their working life-from age 30 to age 60. Among the sobering realities: "A worker putting off saving until age 35 would need to save more than 16 percent of income annually to produce the same potential retirement income at age 65 as someone who started saving at the 10 percent rate beginning at age 30; starting at age 40 would require saving more than 26 percent of income."


Retirement Around the World

For a global perspective on women and retirement security, see the 2014 Aegon Retirement Readiness Survey report, with research assistance from Transamerica Center for Retirement Studies. "The Changing Face of Retirement-Women: balancing family, career & financial security" details differences among women around the world with regard to retirement aspirations and expectations, and explores primary retirement concerns women have and why they find it hard to save for retirement. Among common solutions cited for creating greater access for women to workplace retirement plans and to opportunities to accumulate savings are these: extending benefits to part-time workers; instituting automatic enrollment into workplace retirement plans; and providing options for flexible and phased transition into retirement.

See also results from the 15th Annual Transamerica Retirement Survey, "The Retirement Readiness Challenge: Five Ways Employers Can Improve Their 401(k)s." Among the findings of this October 2014 report:

  • Whereas 70 percent of employers think that the Great Recession has ended, only 1 percent believe the economy has fully recovered.
  • At the same time, most employers (63 percent) say their own company has "fully" recovered financially (15 percent) or has "somewhat" recovered (48 percent), while another 23 percent claim they weren't impacted by the recession. 
  • As an indication of the confidence employers feel about the strength of the recovery, within the past 12 months employers indicate they have taken the following actions: 74 percent have increased salaries versus implementing salary freezes (12 percent); 72 percent of employers hired additional employees versus implementing layoffs or downsizing (16 percent); and 30 percent of employers have increased or added bonuses versus eliminating them (7 percent). 
  • An overwhelming majority of employers (89 percent) view retirement benefits as important for attracting employees and for employee retention. That includes 42 percent who consider such benefits as "very important."

Essential Benefits

According to the 2014 Guardian Workplace Benefits Study, a clear majority (74 percent) of middle-income employees say that their employment-related insurance and retirement benefits account for half or more of their financial preparedness, with 53 percent indicating that these benefits provide most or almost all of that security. As such, 82 percent of middle-income employees say these benefits are crucial when deciding whether to take a new job with an employer or to stay with a company (79 percent). Even as employers may be rethinking their benefits models, there is no doubt that employment-related benefits remain core to attracting and retaining talent. One of the five key issues addressed in the study focuses on the importance of workplace benefits to America's middle class.

Trading in the Cadillac

Employee education is also essential when it comes to better understanding health-insurance benefits in the new health-care landscape. "HSAs and the Coming 'Cadillac' Tax" is a recent installment in a health-care cost containment article series published by Fidelity Investments. The article suggests that with the rise in employer-provided high-deductible health plans (HDHP)-often paired with a health savings account (HAS)-employees need much better help in understanding how these work and their potential for curbing health-care costs.