Employees of large companies have long had access to cushier retirement and other benefits than workers at smaller companies. But part of that gap may be closing, as least as far as retirement benefits are concerned.
About 92 percent of full-time employees at companies with 500 or more employees say they have access to a 401(k) or similar type of retirement plan compared to 75 percent of full-timers at smaller companies with between 10 and 499 colleagues, according to a new survey of 3,466 full and part-time for-profit workers age 18 and older by the Transamerica Center for Retirement Studies and Harris Interactive conducted in December 2008 and January 2009. Workers at small companies are also much less likely to have a traditional pension or be offered the option to make additional catch-up contributions to retirement accounts at age 50 or older.
But, in recent months, giant firms have been slashing retirement and other benefits in huge numbers. Large employers are more likely than smaller companies to have implemented layoffs or downsizing (45 versus 32 percent), frozen salaries (21 percent versus 20 percent), reduced or eliminated nonretirement benefits (12 percent versus 9 percent), and reduced or eliminated retirement benefits (12 percent versus 8 percent). “Now the differences between large and small companies aren’t so pronounced,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Small businesses are adapting retirement plans and large companies are more likely to cut back on those benefits.”
Workers at small businesses, however, continue to be somewhat less optimistic about their retirement prospects than their corporate counterparts. Only about 50 percent of workers at small companies are confident they can retire with a comfortable lifestyle, compared to 57 percent of workers at larger companies. To make ends meet, 41 percent of the workers surveyed at small companies plan to work past age 70 or never retire, compared to 34 percent of workers at larger companies. The largest source of retirement income for workers at both types of companies is expected to be 401(k) and 403(b) accounts and IRAs (45 percent of large company workers versus 39 percent at small companies), but over a quarter of workers at small companies believe that Social Security will be their primary source of retirement income.
All the employees surveyed who utilized retirement accounts contributed a median of approximately 7 to 8 percent of their salary, but the small business workers generally set lower savings goals for themselves. Large company employees think you need to save a median of $850,000 to feel financially secure in retirement, while small business employees think $500,000 will be enough.
Tell us, do you still get better retirement benefits by working for a large company?