The financial crisis had a bigger impact on American’s retirement plans than on people in other parts of the world. A new Towers Watson survey of employers found that U.S. workers were much more likely to have recently pulled their money from the stock market or decided to delay retirement than workers in Europe, Latin America, Canada, or Asia-Pacific. Here are a few largely American ways retirement plans have been reset since the economic meltdown.
[Consider these 3 Effortless Ways to Get Higher 401(k) Returns.]
Fleeing the stock market. U.S. investors are the most likely to jump in and out of the stock market on a whim, the survey of 459 human resources executives in various locations around the world found. While just about a quarter of all the employers surveyed (24 percent) report that many of their employees reduced their equity exposure in company savings plans, almost half (48 percent) of American companies say many workers pulled their nest egg out of the stock market. However, many companies, including more than a third (37 percent) in the U.S., expect their employees to boost their equity allocations this year.
Hardship withdrawals. American workers are the most likely to raid their retirement stash for emergencies. Over half of the U.S. companies, compared to just over a quarter of global employers, report more hardship withdrawals from retirement accounts since the recession began. About 16 percent of American companies expect hardship withdrawals to slow in the coming year.
[Find out What Retirees Wish They Had Done Differently.]
Delaying retirement. Many American workers plan to work longer to recoup their stock market losses. Over half (52 percent) of the U.S. companies surveyed, versus 27 percent of world wide employers, report that more employees are now working past their expected retirement age. Almost a third (31 percent) of U.S. companies (and 22 percent globally) expect this trend to continue over the next 12 months.
Cutting the 401(k) match. Reductions in company contributions to retirement savings plans are a problem largely faced by U.S. workers. Some 23 percent of companies in the U.S. reduced their contributions to retirement accounts since the recession began, compared to just 10 percent globally.
Slashing saving. In the U.S., almost a third (30 percent) of companies report employees cutting back on retirement account contributions, compared to 12 percent world wide. But some of these American companies (23 percent) and foreign employers (15 percent) remain optimistic that employees will increase their savings rate in the coming 12 months to help make up lost ground.