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Many workers saving for retirement blindly

Many workers saving for retirement blindly

While the majority of workers report saving regularly for retirement, many don't have a concrete plan for financing their future and don't use retirement planning tools, according to an Aon Hewitt survey.

Aon Hewitt's 2015 Financial Mindset survey found that 68% of U.S. employees say they regularly save for retirement, though a third does not.

Despite most employees understanding the importance of saving, 37% of those surveyed said they can't afford to save — the most highly cited barrier to saving, Aon Hewitt said in the survey released last week. Others barriers include concerns over not being able to access savings when needed, not understanding where or how to save, and not having a need to save at present.

When it comes to planning for retirement, 54% of workers have compared how much they'll need in retirement to what they are likely to have available, and 53% have estimated how much money they will need to live on during retirement, according to the survey.

At the same time, the survey found only 40% have created a financial plan, and only 17% used tools or resources provided by their employer to save.

Nonetheless, workers appreciate the employer retirement plan and financial planning resources.

Ninety-one percent of employees want help with saving for retirement and long-term needs, according to the survey. Of those, 73% of workers say they would like their employer to offer retirement planning information or courses, and 54% say they want access to a personal investment adviser.

The majority of workers — 91% — say the ease of saving through automatic payroll deductions in their employer's retirement plan influenced their decision to save, Aon Hewitt said. In addition, 86% said employer matching contributions, 76% said tax advantages, and 72% said access to good investments influenced their retirement saving decisions.

While about three quarters of employees are contributing to their employer's retirement plan, many are contributing very small amounts. Thirty-seven percent report contributing 5% of their pay or less, 35% contribute 6% to 10% of pay, and 11% contribute 11% to 15%.

About half of workers say their contributions are the most they can afford.

Of those not putting money in the employer retirement plan, the majority — 48% — said they cannot afford to make contributions.

Employers can help workers save for the future by including features like auto-enrollment, auto-escalation and rebalancing in the retirement plan design, Aon Hewitt said in the survey. Employers should also offer financial guidance tools, develop a financial wellness strategy and make retirement planning and education tools available.

The study is based on a survey of about 2,000 workers at companies with at least 1,000 employees and was conducted in April by market research and trends firm The Futures Co.

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