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Will you have to "overstay your welcome" at your current employer?

According to Mark Miller in a recent MONEY column for Reuters purposes and expectations for 401(k) plans are changing for both employers and the employed, and the opinions of these groups aren’t necessarily in sync.

Instead of focusing merely on the percentage of employees signed up for a retirement savings plan or the amount they contribute on average (both Federal Government mandated measures), employers are getting more concerned with their employees’ returns, and whether or not they will be ready for retirement at 65. Citing surveys conducted by Deloitte, the International Foundation of Employee Benefit Plans, and the International Society of Certified Employee Benefit Specialists, Miller identifies a pessimistic trend: fewer employers are confident that their employees will be ready to retire—only 12 percent now, down from 15 percent as surveyed in 2011.

Downstairs in the cubicles, workers are becoming more realistic, if not pessimistic, with only half as many expecting to retire before age 65 (25%) compared to the early 90s, when roughly half thought they’d start their golden years in their early 60s. Do the math, and we see quite a gap between the expectations of employers and employees with regard to retirement “readiness,” with twice as many employees planning on retiring before age 65 than employers expect to actually do so.

The new concern of employers for their employees’ 401(k) performance has at least something to do with what Transamerica calls “Aging Worker Syndrome,” a term referring to the way the cost of re-training aging workers begins to eat into company profits. So the employer’s attention may not be completely altruistic, but the effect is the same: the combined increase in the attention of both employer and employee, and their mutual interest in retiring “on time,” bodes well for increased savings and better outcomes for retirement plans across the board.

Kevin L. Coppola, President, Compass Investors, LLC

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