In response to the continuing retirement crisis in the United States, some interesting survey results have been published. American workers want to retire at a reasonable age and need to have adequate funds saved to live comfortably; the majority is very concerned that money won t be there.

A recent global poll by CFA Institute showed almost half of respondents would prefer a mandatory, government-imposed solution to retirement savings. Following that, 22% of respondents chose an elective, whereby employees are automatically enrolled in private retirement plans but can opt out if they so choose solution. Almost 70% of respondents want some form of automatic retirement plan entry. Even with a smaller survey population, that's a telling number.

In the March 2013 Employee Benefit Research Institute's Retirement Confidence Survey, only 66% of workers report that they or their spouse are currently saving for retirement. In 2009, this number was 75%. Many Americans may not want to be in charge of their retirement, and unfortunately, some may not have the skill set to accomplish it. In a study conducted by the Organization for Economic Cooperation and Development, U.S. respondents lagged behind 18 other countries in mathematical skills and 12 countries in literacy.¹ While this points at the larger issue of education in the United States, it does support the argument that most workers aren't able to manage and prepare for their retirement on their own. Workers may prefer to rely on their employer and/or the government to provide a meaningful retirement plan that will sufficiently provide for their golden years. In addition, such results highlight the need for more extensive and perhaps mandatory employee education. There are many options available to plan sponsors in this regard.

The shift from relying on defined benefit pension plans and Social Security for retirement income to relying on 401(k) plans and maybe Social Security (younger generations, cross your fingers) has hurt more workers than it has helped. Social Security typically makes up for less than half of a worker's preretirement income,² and with poor investment returns in recent years (for both the federal government's Social Security funding efforts as well as 401(k) plan investments), employees might feel like they are fighting a losing battle. All agree that changes must be made.

Perhaps it is time to consider mandatory retirement plans in the United States. One such example is Australia's retirement system, a highly regarded, two-part means-tested government benefit and mandatory savings account financed by employers. However, in Wade Matterson's November 2012 Benefits Perspectives article, he shows there is no easy answer. The government portion of retirement savings is always, and most likely always will be, at the mercy of changing political environments. In any event, maybe we have reached the point where mandatory education is called for in the United States.

Sources:

(1) Layton, Lyndsey. "Education." Washington Post., Oct. 8 2013. <http://articles.washingtonpost.com/2013-10-08/local/42804364_1_literacy-education-secretary-arne-duncan-adults>.
(2) Social Security Administration. "Understanding the Benefits." 2013. <http://www.ssa.gov/pubs/EN-05-10024.pdf>. (page 4)