Workers are getting a little more help from their employers when it comes to retirement savings, but many are still falling short in building their retirement nest eggs.


Many companies suspended or slashed their matching of an employees’ 401(k) contributions during the recession, but most have now restored them. The percentage of companies making matches increased from 91 percent in 2010 to 95.5 percent in 2011.

However, the average company contribution to an employee’s retirement account is lower than it was before the financial crisis. The average company contributed 4.1 percent of pay in 2011, up from 3.7 percent in 2010. This is less than the peak of 4.7 percent seen in 2006.

Employers are throwing in a perk that often doesn’t cost them anything: 401(k) advice. Many 401(k) plans now allow employees to talk with administrator representatives to discuss their needs and get help comparing investment options available to them. Those workers who take advantage of this advice tend to save more and be more diversified than those who don’t use the service.

Despite the return of matching contributions, financial advisers and other experts say that workers still aren’t saving enough. A study by T. Rowe Price reported that two thirds of investors surveyed contributed 10 percent or less of their salaries to their 401(k) plans. Nearly one third indicated they were unsure of how much they were saving.

Financial planners recommend that workers save 15 to 20 percent of their income for retirement. Workers who don’t start saving until their 40s or 50s should save more. These lower saving rates mean many workers will have to delay retirement, take on part-time work in retirement, or spend significantly less during retirement.

Some advisers see the decline in company matching amounts as partly to blame. Many workers see little reason to contribute beyond what their employer matches. Some companies are trying to change this by matching a higher portion of a worker’s salary, but lowering the amount matched per dollar. For example, a company could go from matching up to 5 percent of pay dollar for dollar to matching up to 10 percent of pay, but only contributing 50 cents for each dollar the employee puts in. This would increase the total contribution to 15 percent of pay from 10 percent for workers who max out their employer contribution, but the total amount contributed by the company would stay the same.

Other companies are trying to boost savings by making the process automatic. The number of plans with an automatic enrollment feature increased from 23.6 percent in 2006 to 45.9 percent in 2011. And 55.2 percent of plans had a component for automatically increasing the amount contributed by the employee, up from 31.2 percent in 2006. Such step-up programs, which typically increase the percentage an employee contributes by one or two percentage points each year, can be a way for an employee to work up to the target 15 to 20 percent savings rate.

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