Encouraging News on the Retirement Front


With all the doom and gloom surrounding America’s retirement savings crisis, we’ll take any good news we can get.

The Employee Benefit Research Institute issued two pieces of news this week that lead us to believe we won’t be reduced to eating dog food in retirement after all.

The first bit of encouraging news was the EBRI report that states the percentage of workers who participate in an employment-based retirement plan increased in 2013, the first such increase since 2010. More specifically, the percentage of all workers participating in their employers’ retirement plan inched upward to 40.8 percent in 2013 from 39.7 percent in 2010. That’s an increase of slightly more than one percentage point, but an increase nonetheless.

The number of workers participating in retirement plans rose to 74.2 million in 2013, which was the highest number since 2007. Each category of workers was at its highest level of participation since 2008.

EBRI had a relatively simple answer for the uptick – a slowly improving economy and employment rate in the aftermath of the great recession.

“Other underlying factors also have an impact, but higher employment generally leads to higher levels of retirement plan participation,” said Craig Copeland, EBRI senior research associate and author of the report.

The second bit of positive news was EBRI’s report saying that the amount of savings that Americans need to accumulate just to meet health care needs in retirement has gone down. Thanks to enhanced prescription drug coverage mandated by the Affordable Care Act, the EBRI found that the savings target declined between 2 percent and 10 percent between 2013 and 2014. As the EBRI explains it, a man would need $116,000 and a woman would need $131,000 in 2014 if they wanted a 90 percent chance of having enough money saved for health care expenses in retirement.

But along with this positive news came a caveat: Retirees may pay a greater share of their overall costs in the future because of the combination of Medicare’s financial condition and cutbacks to employment-based retiree health programs.

In addition, many individuals will need to save more to cover health care costs, because the report doesn’t factor in the cost of long-term care nor did it take into account the number of people who retire prior to becoming eligible for Medicare.

These two reports are encouraging news, but they don’t paint an overly rosy picture of the retirement savings scene. Americans are still lagging behind in accumulating the funds they will need to pay for a retirement that could last upward of 30 years. And they are faced with conflicting views on how to invest the funds they have managed to save. No matter how many encouraging reports are out there, people still need professional advice to guide them toward and through retirement.



Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Connect with Susan →

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