With persistently high unemployment, a sluggish housing market and a
slow-growth economy, the Great Recession has had a negative impact on
many people’s finances. One unexpected bright spot has emerged, though,
as more Americans say they are now focusing more on saving for
Consumers, especially women, are paying much greater attention to the
savings within their employer-sponsored retirement plans, with nearly
half saying retirement benefits are more important now than before the
start of the recession, according to new research by The Hartford
Financial Services Group, Inc. (NYSE: HIG).
The Hartford’s Retirement & Recession Study, conducted earlier this
year, found a sharp, upward spike in the levels of understanding and
participation in defined contribution retirement plans such as 401(k)s.
Overall, 76 percent of respondents said they “completely” or “mostly”
understood their retirement benefits in 2010 compared to 65 percent in
The biggest increase in the understanding of retirement benefits came
from women, with 69 percent saying they completely or mostly understood
their retirement benefits compared to 56 percent last year. Men’s
understanding improved to 83 percent from 75 percent a year ago.
“Greater awareness of the importance of retirement savings is one of the
few positive outcomes of the Great Recession,” said Sharon Ritchey,
executive vice president and director of The Hartford’s Retirement Plans
Group. “We’ve known for a long time that consumers need to save more for
retirement and pay closer attention to their retirement savings. With
economic issues staring us in the face every day, it appears that
consumers are, at least for now, focusing more on preparing for
“It’s also welcome news that women are demonstrating greater
understanding of the importance of retirement savings,” Ritchey said.
“Unfortunately, fewer women say they have a solid grasp of their
retirement plans than men.”
The Hartford’s study showed that consumers value their retirement plans
more now than at the start of the Great Recession. Nearly half — 43
percent — said they now view their retirement plan as more important and
49 percent said they view it as just as important as before the economic
In another positive sign, consumers are more likely to participate in an
employer-sponsored retirement plan today than they were a year ago. The
percentage of those saving in a 401(k) or other defined contribution
plan when offered by their employer rose to 84 percent in 2010 from 80
percent in 2009. Again, women showed the biggest jump, with 70 percent
participating in 2010 compared to 61 percent in 2009. Men’s
participation rate jumped to 71 percent, up five points from last year.
“The greater rate of participation in retirement plans, especially on
behalf of women, is a real encouraging sign,” Ritchey said. “Compared to
men, women have higher hurdles to reach a comfortable retirement. Women
tend to earn less, be away from their jobs more often because of
disabilities, pregnancies and family issues, and often invest less
aggressively. On top of that, women tend to live longer than men and
therefore need to rely on their retirement savings for more years.”
Ritchey said she encourages women to start saving for retirement as soon
as possible and keep saving continuously throughout their working years.
Women should find a financial advisor that they trust and work with him
or her to create a long-term financial plan that includes a
well-diversified retirement portfolio. The plan should include
longer-term investments such as equities to help women not only reach
retirement but live comfortably for many years thereafter, she said.
The Great Recession, although declared over by government economists,
made it more difficult for many people to save and invest for
retirement, according to The Hartford’s study.
One in five consumers (22 percent) said poor economic conditions forced
them to reduce or eliminate contributions to their retirement plan.
Women were twice as likely to have been affected (22 percent in 2010 vs.
11 percent in 2009) and men felt some pain as well (21 percent in 2010
vs. 15 percent in 2009).
Matching contributions from employers were reduced or eliminated for one
in five consumers in 2010 (20 percent), an increase from 2009 (16
percent). Women saw a bigger impact year-over-year, with contributions
being altered for 19 percent in 2010 compared with 14 percent in 2009.
The impact on men was fairly stable with contributions changing for 21
percent in 2010 compared to 19 percent in 2009.
“When struggling with day-to-day economic issues, it can be difficult
for many people to continue their focus on long-term financial issues
such as retirement,” Ritchey said. “But many women may spend 20, 30 or
even 40 years in retirement. It takes financial discipline and sometimes
sacrifices to prepare financially, so stick to your retirement strategy
no matter what the obstacles. Your quality of life in retirement will
depend upon it.”
The Hartford’s study was conducted online this spring by Zeldis
Research, polling 1,000 adults ages 18-65. The study had a margin of
error of less than 3 percent.