Seven out of 10 US employees are not saving enough for retirement, while older workers are now more likely than before the pandemic to say they will retire beyond the age of 70.
That is according to findings from a survey of 9,600 employees by Willis Towers Watson (WTW), which found that 52% are facing key risks to their retirement security.
Those risks include saving less than 5% of salary and wanting to save more, borrowing from their 401(k) plan and withdrawing funds from their retirement plans.
The top three reasons given for not saving more for retirement included paying off debts, saving money for other reasons, and not being able to afford to, cited by 36%, 28%, and 27%, respectively.
Furthermore, the proportion of workers aged 50 and over who plan to retire beyond 70 has risen to 36%, up from 30% in 2019, suggesting that the pandemic has impacted their plans.
“Saving enough money to retire comfortably while meeting current financial needs remains a significant challenge for a majority of workers,” said Mark Smrecek, senior director for retirement at WTW.
“At the same time, workers, and especially older ones, are asking themselves when they will be able to retire. With the pandemic and current economic uncertainty with inflation, how workers are transitioning to retirement is changing.”
Of those surveyed with an employer retirement plan, 73% said that it is the primary vehicle they use to save for retirement.
And while 69% said that their retirement plan meets their needs, many employees would like more help from their employers, with 44% ranking retirement in the top three issues they most want their employers to focus on.
“When their financial well-being is strong, employees are more likely to be engaged and productive and less likely to leave their organisation,” said Jennifer DeMeo, managing director for integrated & global solutions at WTW.
“It’s imperative for employers to ensure their total rewards programmes provide not only benefits that meet employees’ needs, but also the employee engagement resources, tools and technology to make informed decisions about saving for retirement.”
Image credit: iStock
Author: Chris Seekings