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Disconnect Between Overall Economic and Personal Financial Outlooks

“Traditionally, participant attitudes toward the overall economy and personal financial outlook trend closely together, either positively or negatively,” said Suzanne Nolan, partner and director of marketing and communications for Mercer’s Outsourcing business “The unusual disconnect found in the 2010 Workplace Survey illustrates how severely participants were impacted by the global recession, and that a return to precrisis ‘optimism’ may take longer than many had hoped.”

Showing their optimism in the state of the economy overall, the proportion of participants expecting the economy to grow has increased sharply since June of 2008 (21 points, to 77%), and close to the level registered in 2007 before the global crisis. Conversely, the share expecting the economy to be heading for recession has fallen by almost half, to 23% (Table 1).

A key barometer of personal outlook, however, tells a different story. When asked about perceived job security over the next 12 months, 36% responded that they are at least “concerned,” the highest level since the survey’s inception, and more than one-third (35%) of participants have at least considered delaying retirement, slightly higher than the 32% recorded in June 2008.

Again reflecting the general sentiment of anxiety around retirement in particular, for the first time since 2006, “saving enough for retirement” has replaced “just keeping up with monthly expenses” as the problem most worrisome to participants..

Retirement savings adequacy is in fact a major concern for the majority of participants; 65% say they are not saving enough for retirement, and that they should have started saving earlier (64%). In addition, participants continue to lower their expectations for income in retirement: participants indicated that they would like an average of 76% of their preretirement annual income in retirement, a significant drop from the 80–82% range found since May 2006.

“Saving enough for retirement has now become even more complex for participants who have seen huge declines in their account values over the past few years. This is complicated by efforts to understand the personal implications of health care reform and even calculating the true cost of health care in retirement,” said Nolan. “Now more than ever we are seeing a true ‘call to action’ for plan sponsors and administration providers to not only communicate the value of saving for retirement, but to offer as many educational resources and tools as possible to assist in the process.”

The Mercer Workplace Survey tracks employee attitudes toward, and experiences with, employer-sponsored retirement, health, Mercer is a leading global provider of consulting, outsourcing, and investment services. For more information, visit www.mercer.com.

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