Many Americans are struggling with high out-of-pocket costs for health care.
By Cyril Tuohy
Employees trust their employers by overwhelming margins when it comes to financial advice, according to a survey released by the Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF).
The survey found that 81 percent of respondents trust financial information offered by their employer, 69 percent trust information provided by their financial institution and 63 percent trust the information provided by family.
Results of the independently conducted survey show how influential an employer can be in guiding employees to set aside funds for the future.
“Plan sponsors can play a really powerful role in helping employees understand their retirement plans because employees trust them,” Teresa Hassara, TIAA-CREF executive vice president, said in a news release.
She said that employers can encourage employees through “communication, education and advice that resonates with employees based on where they are in their lives.”
Hassara added that plan sponsors, with the support of plan providers, need to continue to “engage and educate” workers about investment options and how they work.
A plan sponsor is the employer – Coca-Cola Co., for example – which offers a retirement plan to employees. A provider is the broker/dealer, life insurer or mutual fund that offers the investment choices in the plan.
The TIAA-CREF survey also found that 33 percent of employer-sponsored plan participants were unfamiliar with the investment options in their plan.
The survey also found that 37 percent of women were not familiar with the investment options, compared with 29 percent of men who were unfamiliar with investment options.
Only 24 percent of participants between the ages of 55 and 64 were unfamiliar with the investment options, compared to 43 percent of plan participants between the ages of 18 and 34, the survey also found.
Proposed legislation in Congress would mandate plan sponsors and record-keepers to disclose more information around lifetime income that current assets might provide as a way to encourage and educate employees about where and how much to save for the future.
Retirement experts generally advise contributing between 10 and 15 percent of salary to provide for needs in retirement. Many workers set aside closer to 5 or 6 percent.
Employer-sponsored defined contribution retirement plans are popular with employees because they are portable, flexible and convenient, and they offer unparalleled tax advantages.
The survey was conducted by KRC Research by phone among a national random sample of 1,017 adults, age 18 years and older, between Jan. 3-5, 2014. The margin of error for the entire sample is plus or minus 3.1 percentage points.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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