Empower (Inflation-Weary) Employees As They Struggle To Save For Retirement

Americans are unsure whether they will have enough money saved to live comfortably in retirement amid market volatility and continued inflationary impacts.

According to new research from Principal, just one-third of U.S. workers say they’re confident they’ll have enough money saved to enjoy activities they’ve dreamed of in retirement, and nearly half have concerns about keeping up with inflation. Many of those surveyed said they regret not having started saving sooner in their careers or saving more.

“The findings indicate a unique opportunity for both employers and advisors to boost retirement readiness and help grow employees’ confidence,” said Sri Reddy, SVP of Retirement Solutions at Principal. “Plan design is critical to supporting employees in their financial journey. According to the latest research, more than half (51%) of respondents said they started their initial retirement savings journey via auto enrollment, and the majority (81%) suggest it helped them save sooner.”

Further dampening confidence is a lack of financial knowledge. One-third of those surveyed said they have only a fundamental or basic level of knowledge about personal finances, and just 14% said they have an advanced level of knowledge. Only 44% of respondents said they feel confident they have the knowledge to make good decisions with their retirement account at job change or retirement.

Increasingly, U.S. workers are relying on their workplace savings plans to supplement their retirement income, the research found. Eighty-two percent of workers indicated they will rely on their employer-sponsored plan as a source of retirement income, 78% will rely on Social Security, and a smaller percentage will look for part-time work. 65% of respondents said they trust their retirement plan service provider is helping them reach their retirement goals and half said they trust their employer is doing all it can to help them save for retirement.

“While we’re enthused to see individuals taking the reins on their own savings outcomes by leveraging employer-sponsored plans, it’s important to understand that Social Security is one of the few things that’s truly inflation indexed, and a key component of a sound investment strategy that you can count on for years to come,” said Reddy.

The study found a high number of retirement savers wanting financial education specific to their gender or ethnicity, particularly women (31%) and People of Color (48%). Education geared toward their specific needs could offset issues for the 19% of overall survey respondents that said they regret the debt they’ve incurred.

“It was surprising to see such wide disparities in financial security perceptions depending on gender and race/ethnicity,” said Reddy. “More than half of white respondents (56%) are feeling financially secure, and just 39% of Hispanics and People of Color in agreement. When it comes to gender, women lag behind men in that feeling (43% vs. 55%).”

Plan design isn’t the only way employers can support retirement readiness, said Reddy.

“The inherent need for ongoing financial education is another gap employers and advisors can fill – but in order to fill this gap, everyone must work together,” said Reddy. “Financial advisors should be connecting interested employees to the educational tools, plan sponsors should be working to set employees up for financial success, and on the flip side, employees should be taking advantage of all of the financial education and tools at their disposal.”


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