Employers in many fields are making it harder to save enough money to retire. That makes retirement planning a lot more difficult.
A study by consultants Towers Watson found that the value of total retirement benefits provided to new salaried employees between 1998 and 2008 in the eight industries it surveyed declined by 19 percent, from 7.88 percent of pay to 6.36 percent. Total retirement benefits include defined benefit (old-fashioned pension plans) and defined contribution (401(k) plans, retiree medical and retiree life insurance plans).
Employees in the retail and wholesale industries took the biggest hit to their retirement plans, dropping 33 percent, from 5.72 percent of pay to 3.82 percent. Service industry workers were the only group to see their retirement benefits increase -- from 4.16 percent of pay to 4.3 percent of pay, an increase of 3 percent. Not great, but better than the rest of us are doing.
Here are total retirement contributions in 2008 as a percentage of pay in the eight industries surveyed and the amount they have declined (or increased) since 1998:
- Retail and wholesale, 3.82 percent, down 33 percent.
- Manufacturing, 6.35 percent, down 29 percent.
- Energy, natural resources, gas and electric, 9.23 percent, down 24 percent.
- Pharmaceuticals, 9.27 percent, down 13 percent.
- High tech, 5.24 percent, down 10 percent.
- Financial services, 8.28 percent, down 9 percent.
- Health care, 6.1 percent, down 4 percent.
- Services, 4.3 percent, up 3 percent.
Towers Watson says that most of the decline was because companies switched from traditional pensions to 401(k)s and other types of defined contribution plans. Also, the financial crisis in 2007 encouraged companies to contribute even less.
For most people, the bottom line is this: Contribute at least enough to your 401(k) to force your employer to kick in the maximum match it offers. Otherwise, you are leaving money on the table and who can afford to do that?