State and local government employees are considerably more likely to have traditional pension benefits than those who work in the private sector. But some cash strapped states are beginning to reduce and even eliminate pension programs for new and sometimes existing workers, which is causing some public sector workers to feel insecure about their retirement prospects.
[Bookmark the U.S. News Retirement site for more planning ideas and advice.]
Most public sector workers (71 percent) say they will be eligible for a pension in retirement, according to a new ING Institute for Retirement Research and Synovate survey of 1,026 full time state and local government employees between ages 20 and 70, excluding public school teachers. Most of the employees surveyed (68 percent) expect 50 percent or more of their current income to be replaced by a pension in retirement. But many government workers are concerned that their retirement benefits could be cut before or even after they retire. Only half (51 percent) of government employees are confident that their pension benefit will remain unchanged throughout their retirement.
Many employees in the public sector (64 percent) have an employer-sponsored retirement savings plan, similar to a 401(k), in addition to a pension. About three quarters of those offered a retirement account at work use it to save for the future. But most of the employees surveyed have small retirement account balances. Half of government workers have less than $50,000 saved and another 20 percent don’t know how much is in their retirement account. Just 30 percent of government workers have over $50,000 saved for retirement. While most workers (56 percent) say they can save a little for retirement, only 39 percent think they are saving enough. Over a third (38 percent) of the workers surveyed say they are apprehensive about their ability to save enough for retirement.
Almost all the government employees characterized their retirement investing strategy as conservative (50 percent) or moderate (44 percent). Only 6 percent of employees said they are aggressively investing their retirement savings. A large majority of the government workers (74 percent) say they do not consider themselves risk takers in their personal life.
A traditional pension don’t necessarily mean government workers will be able to retire early. Most government workers expect to retire in their 60s (44 percent). Only 13 percent are counting on an early retirement before age 60. A significant amount of retirees (19 percent) also plan to retire after age 70 or never retire. Some 41 percent of government employees have increased their expected retirement age as a result of the economic decline, typically because they expect the cost of living and health care expenses to increase in the future.