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Retirement Planning Series: How Much Do Retirement Benefits Really Cost Participants?

| May 11, 2022
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Trends are starting to emerge in various industries for retirement benefit costs. Retirement benefits include defined benefits, defined contributions, and post retirement medical programs.

The financial advisors at Capital Analysts of Jacksonville are experienced in retirement planning and retirement benefits. We use our experience and lots of data to help clients make strategic decisions regarding retirement benefits that line up with each industry.

Take a look at some of the retirement planning trends we are seeing for retirement benefit costs:

The industry the company falls under is starting to play a very large role in how employers allocate budgets for employee benefits. Employers are now spending higher percentages on healthcare benefits than retirement benefits compared to 15 years ago. When taking a look across all industries, retirement benefits averaged 6.8 percent of pay, while healthcare costs averaged 11.5 percent of pay.

In the Oil, Gas & Electric industry, the retirement benefit costs averaged 12 percent of pay. In the general services, healthcare, high-tech, and the retail industries, the retirement benefit costs averaged 5.5 percent.

Within the Oil, Gas & Electric industry, the utility, energy and natural resource companies have the highest pension sponsorship rates. This is due to the fact that the utility companies are unionized and maintain a consistent structure for both union and non-union employees. Additionally, the Oil, Gas & Electric companies are demanding physically. The defined benefit plans provide flexibility for when employees retire.

In the finance and manufacturing industries, the percentage of pay is also higher than average. The finance industry includes insurance companies. Insurance companies have a high-defined benefit sponsorship rate, however, since 2008, banks and other finance companies are less likely to offer defined benefit plans to new employees.

Over the last 10 years, manufacturing companies have shifted from defined benefit to defined contribution plans and reduced the overall investment in retirement benefits. After closing or freezing their defined benefit plans, most of the manufacturing companies enhanced their defined contribution contribution, while also lowering their retirement benefits to new employees.

When considering whether or not to offer retirements benefits and how to estimate costs, it’s important to consult a professional. At Capital Analysts of Jacksonville, our advisors pride ourselves on providing the retirement planning resources our clients need to make informed decisions about retirement benefits and their costs. Our ensemble operating style enables us to provide comprehensive and objective advice.

If you would like to learn more about retirement benefits or Capital Analysts of Jacksonville, contact Mark at (904) 730-7433 or [email protected]  

Source:, 2016 Willis Towers Watson Survey


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