Workers Would Trade Pay for Greater Retirement Security

News Updates

Increasing numbers of U.S. workers say they would be willing to trade some of their pay for more secure and generous retirement benefits, according to a survey by consultancy Towers Watson.

The 2011 Towers Watson Retirement Attitudes Survey found that more than half (55 percent) of respondents were willing to pay a higher amount from each paycheck to ensure they have "a guaranteed retirement benefit (e.g., $1,000 per month for life)," up from 46 percent two years earlier. Additionally, 50 percent said they would trade a portion of their pay to ensure they have access to health care benefits if they retire before they are eligible for Medicare benefits, up from 40 percent in 2009.

The survey, conducted in June and July 2011, includes responses from 9,218 full-time U.S. workers at nongovernment organizations with 1,000 or more employees.


“Since the economic crisis, employees have been paying much closer attention to their retirement readiness, and many are willing to look at new ways to balance their mix of pay and benefits,” said Kevin Wagner, a senior retirement consultant at Towers Watson. “This may reflect their firsthand experience with financial market volatility, continuing worries about the economy and fears of future cutbacks to benefits. Workers, especially older employees, may also be reeling from declines in their retirement account balances as well as home values due to the financial crisis. As a result, retirement security has become significantly more important to them,” he said.

Young Workers Concerned as Well

This growing interest in retirement security is not limited to mature workers. The survey found that some of the most dramatic changes in attitudes toward risk, rewards and security trade-offs have been among young employees and those with a defined benefit (DB) pension. Among DB plan participants younger than 40, the number willing to pay for a guaranteed retirement benefit jumped by nearly 70 percent—from 39 percent in 2009 to 66 percent in 2011.

Looming Benefit Reductions Feared

Many employees fear that additional cuts in their retirement and health benefits are on the horizon. More than four in 10 (44 percent) were worried about reductions to their retirement benefits over the next two years, with younger DB plan participants particularly concerned (63 percent).

Employees were even more concerned about having to shoulder more financial responsibility for their health care costs. Nearly three in four employees (73 percent) expressed concern about higher out-of-pocket health costs and co-pays over the next two years, up from 67 percent in 2007.

“The fact is that predictable health costs and retirement guarantees have become significantly more important over the last few years to employees, no matter what their age,” said Bill Daniels, a senior retirement consultant at Towers Watson. “Employees are clearly becoming more interested in adjusting the balance between financial risk and opportunity toward security, especially when it comes to their retirement benefits. For employers, addressing employees’ retirement and health care benefit preferences could very well help to lessen their financial worries and increase engagement levels,” he noted.

Additional Highlights

Other survey findings include:

Rising health care costs

was the most important reason employees were concerned about retirement security, cited by 64 percent of respondents. More than half (56 percent) cited concerns over Social Security or Medicare benefits and higher prices for necessities.

Older employees, women, lower-paid workers and those with health issues were most willing to relinquish control over their retirement investments in exchange for more stability in their retirement benefits over the long term.