Retirees say their employers should have done more to help secure their futures
Sixty-five percent of retirees do not feel financially secure in retirement, according to a survey by real estate firm Clever, and one quarter say they regret retiring because they feel unprepared for this instability. Fifty-four percent say their former employers didn’t contribute enough to their retirement and 31% say they weren’t offered a 401(k) or pension plan at all. Because of this lack of support, 1 in 10 retirees say they have to work part-time, and 73% say they took on this extra work in order to cover basic expenses.
“Many Americans are living paycheck to paycheck while they are part of the workforce and don’t have the opportunities to put away adequate savings,” says Taelor Candiloro, a research analyst with Clever. “That financial stress will follow them into retirement.”
While a 401(k) match is one of the most fundamental ways employers can contribute to the future financial security of their workforce, how much they contribute is left to their discretion. Most employers choose not to offer more than a 6% match, according to the Bureau of Labor Statistics. At the end of their careers, the average employee has compiled $120,000 by retirement age, according to PwC, which provides less than $1,000 per month over a 15-year retirement span.
And many employees fear they will outlive what they’ve saved: more than half of retirees surveyed by Clever say this is their top concern. For employees who have yet to retire, this scenario could be avoided with some employer-provided resources, like financial education and other benefits, like access to HSAs, debt relief programs and caregiver support.
“While retirement will continue to be one of the largest financial assets for individuals, the need to harmonize one’s entire savings picture is just as important,” says Jeff Cimini, senior vice president of retirement product management at Voya Financial. “However, the reality is that we often find many individuals don’t recognize how many great resources are available to them — and many without cost — directly from their employer. So for employers, education and communication are going to remain important keys to success.”
Employers who do offer a retirement plan can boost its power through special features like auto-enrollment, Cimini says. Auto-enrollment gives their workforce the ability to take advantage of the benefit without thinking, and auto-escalation increases the amount the employee contributes each year, allowing workers to sit back and watch their savings grow.
“People are experiencing widespread financial instability right now,” Candiloro says. “Each individual's finances are unique, and so that instability is going to affect them differently. But overall, there needs to be a reframing of how employers approach what it means to provide support for the humans that make up that business.”
This article was written by Amanda Schiavo from Employee Benefit News and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to email@example.com.
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