Workers Less Confident on Retirement

A majority (88%) of U.S. workers are struggling to meet basic living costs, fueling a sharp decline in retirement confidence. This is according to a new survey by WTW, a global advisory, broking and solutions company. The survey of 10,000 U.S. employees also revealed a sharp disconnect between the financial well-being support employees want from their employer and what companies are delivering.

The 2024 Global Benefits Attitudes Survey found nearly half of employees (46%) are extremely worried about paying for basic living costs. Employees ranked food (73%), healthcare (72%), housing (69%) and transportation (66%) as their main cost concerns. The number of employees who report living paycheck to paycheck climbed from 37% in 2020 to 44% this year, while the number of employees who said they were worse off financially compared with a year ago more than doubled from 2019 (16%) to this year (33%).

Four in 10 employees (41%) are not on the right track with respect to their finances, and nearly a quarter (21%) expect their financial situation to worsen over the next year. Moreover, 59% of employees said money concerns are having a negative impact on their overall well-being, resulting in missed medical appointments, higher levels of stress and anxiety, and less likelihood of meeting with friends and family.

“High inflation combined with the aftermath of a once-in-a-generation pandemic is causing many employees to feel overwhelmed and discouraged about their financial situation, which is affecting overall wellbeing,” said Mark Smrecek, senior director, Retirement, WTW. “Employers should take action to improve financial wellbeing within their organizations by adequately educating employees on their resources to close financial gaps and connecting employees with relevant elements of their total rewards package.”

Growing financial problems and uncertainty with inflation are also affecting employees’ retirement confidence and savings. Nearly half (46%) of older workers (age 50 and higher) expect to work past age 70, a sharp rise from 36% two years ago and 30% prior to the pandemic. Additionally, eight in 10 workers (79%) admit they aren’t saving as much for retirement as they should be, and only half (52%) are on the right track to retirement.

Interestingly, the survey revealed a significant gap between the financial well-being support employees want from their employers and the priority employers are placing on financial well-being initiatives. Two in three employees (66%) ranked financial well-being as the area where they want the most support from their employers over the next three years. In fact, almost half (47%) of employees want employers to help grow their savings and wealth, followed by making the most out of benefits (35%) and providing access for emergency savings (33%). However, other WTW research found only one in four employers (23%) ranked financial well-being as a top priority for their well-being program over the next three years.

“Employer retirement programs, and specifically defined contribution plans such as 401(k)s, remain the primary path for employees to save for retirement,” said Beth Ashmore, managing director, Retirement, WTW. “With challenges meeting their day-to-day expenses while still planning for retirement, employees are looking for help from their employer to build a retirement nest egg, but they also report needing flexibility for emergencies and having a desire to maximize their benefits.

“Yet, there is a clear disconnect in priorities between employers and employees,” continued Ashmore. “Employers have an opportunity to align their focus with employee value, cost pressures and talent objectives to address how their benefit programs, particularly retirement and financial well-being initiatives can help employees juggle their finances today while being on track for retirement.”

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