SAN FRANCISCO — Workers now understand that their retirement outlook has grown more dire as employers increasingly move away from traditional pensions, but a significant portion of those workers aren't doing much to improve their retirement security, according to the 17th annual Retirement Confidence Survey by the nonprofit Employee Benefit Research Institute.
More people seem to be aware that the traditional pension is on tenuous ground, with 45 percent of workers saying they're less confident about receiving money from a traditional pension, according to the survey of 1,252 U.S. adults 25 and older.
Seventeen percent of workers experienced cuts to their pensions firsthand within the past two years, according to the survey produced by the institute and Mathew Greenwald & Associates, a survey-research firm.
The survey has a margin of error of plus or minus 3 percentage points.
But of the 17 percent who experienced retirement-plan cuts, 39 percent said they've not made any changes as a result of the cutbacks.
"I looked at that and said, 'This has to be an age influence' " — that is, what younger workers are doing — said Jack VanDerhei, a Temple University professor, EBRI fellow, and co-author of the survey. See the full report on the EBRI Web site.
"Surprisingly, it's not. You're virtually as likely to do nothing if you're 55 years or older as if you're younger," he said. That's worrisome, he said, because "if you lose your defined-benefit accruals when you're old, you have a huge financial setback. And they're basically not doing anything."
The good news is that 32 percent of those who experienced cutbacks are putting aside more in savings as a result. Another 12 percent said they're trying to stay healthy. Five percent are planning to work in retirement as a result of their employer's actions, 5 percent say they'll make greater use of financial planning or investment information, 4 percent say they'll seek advice from a financial professional and 4 percent say they'll postpone retirement.
Eventually, changes in 401(k) plans will lead to a better savings outlook, VanDerhei said. The growing trend among employers to automatically enroll workers in 401(k) plans and then automatically increase their contribution amounts each year "will save a huge percentage of defined-contribution plan participants who, left to their own devices, have shown repeatedly that they're just not going to contribute or they're not going to contribute enough," he said. See related story on trends in 401(k) plans.
Over the next year, "you should certainly see the participation rates going up and the percentage of people who have saved going up," he said. However, "I don't think, after a year's worth of this, you're going to find a lot of increase in accumulated savings at that point."
The worrisome fact remains that plenty of workers are still counting on a pension that's unlikely to materialize.
Only 41 percent of workers said they or their spouse have a traditional pension, but 62 percent of workers said they expect income from such a plan in retirement — an unrealistic assumption as employers generally aren't adding new members to their pension-plan rolls.
Similarly wishful thinking is evident when it comes to health coverage in retirement.
Despite employers' penchant for cutting back on retiree health benefits, 41 percent of workers surveyed expect employer-provided health insurance in retirement. That's about the same percentage as the 43 percent of retirees who report having such coverage currently.
Eighteen percent of the workers said they expect the employer to pay the full cost of such coverage, while just 14 percent of the current retirees said that's the case (10 percent of the retirees said the retiree pays and 17 percent said the costs are shared).
Just 53 percent of the workers said they won't have employer health coverage when they retire, compared with 57 percent of the retirees who said they don't have it currently.
The total of workers' savings and investments varies widely by age. Overall, 49 percent of workers have less than $25,000 saved, not including the value of their primary residence or defined-benefit pension benefits.
Twenty-three percent of workers have between $25,000 and $99,999 saved, while 29 percent have more than $100,000 saved.
Among those closest to retirement — workers age 55 and older — 32 percent have less than $25,000 saved, while 48 percent have more than $100,000 saved.
Among those 35 to 44, 52 percent have less than $25,000 saved and 24 percent have more than $100,000 saved. Among those 45 to 55, 35 percent have less than $25,000 saved and 40 percent have more than $100,000 saved.
Still, 72 percent of workers are either very confident or somewhat confident that they'll have enough money for a comfortable retirement, about the same portion as said that a year ago.
While 24 percent of workers overall say they'll retire at age 66 or later — presumably to give themselves time to ramp up savings — some may be hindered in their plans.
About 40 percent of retirees say they had to leave the work force earlier than they planned percent due to downsizing, obsolete skills, health problems, a disability, or to care for a family member — a figure that has held fairly steady for about 15 years.
Still, the portion of retirees who say they have worked in retirement is higher this year at 37 percent, compared with 27 percent a year ago. In general, that figure has hovered around 25 percent every year since 1998, though it hit 32 percent in 2004.
That rise could be a response to a lack of savings, VanDerhei said, or it could be related to health-care costs.
"When retirees find out what their deductibles and cost-sharing provisions are under Medicare, sometimes they long for active health insurance coverage again," he said.
Andrea Coombes is MarketWatch's assistant personal finance editor, based in San Francisco.