Several recent surveys reveal that the financial impact of the pandemic is forcing many employees to rethink their retirement plans.
A new Willis Towers Watson survey of nearly 5,000 U.S. workers conducted in October found that one in four expect to delay retirement, including more than a third of employees aged 50 or older (35%) who plan to retire at age 70 or older. Moreover, nearly a third of employees in the same age cohort (31%) admit they will need to save more for their retirement.
Employees also indicated that they are looking to their employers for help. More than half of respondents (53%) cited saving for retirement as the number one area they want help from their employer. Additionally, 40% say guidance on how to better manage their finances has become more important in the past six months. Yet only a third of respondents (36%) say the tools and resources offered by their employers to help manage their finances meet their needs.
And while the number of employees living paycheck to paycheck has remained steady, one in four respondents (24%) say their finances have worsened over the past six months. Additionally, nearly 4 in 10 have been unable to pay bills, are carrying over interest charges for a sustained period, or have had to borrow money from family and friends to make ends meet.
“The pandemic is clearly shining a light on the precarious financial state of many employees. While some employees are spending less and saving more, a disturbingly high portion are being forced to tap into retirement savings to get by,” says Shane Bartling, senior director of Retirement at Willis Towers Watson. “Yet the news is not all gloomy, as some employees, including lower-income wage earners, say their finances are improving.”
Younger Workers, Too
Despite being the furthest away from retirement, younger workers also believe the pandemic will impact their retirement plans. A survey by Broadridge Financial Solutions of 1,250 current full-time employees fielded in September 2020 found that over half of Millennial (51%) and Gen Z (60%) workers expect to postpone their retirement due to the pandemic.
Furthermore, more than a third of workers (35%) reported that their financial wellness benefits were reduced since the beginning of the pandemic. Broadridge found that Gen Z respondents were most impacted by the reduction of financial wellness benefits (51%), followed by Millennials (34%), Gen Xers (22%) and Boomers (19%). Workers who reported reduced financial wellness benefits since the beginning of the pandemic made material lifestyle adjustments to stay on track to maintain financial goals, the survey also found.
Not surprisingly, 60% of workers say that the pandemic has caused them to look much closer at the benefits an employer offers. While responses varied about what financial information they would find beneficial from their employer, the study found that younger generations are more likely to believe that having a financial advisor is worth the cost—with 76% of Gen Zers and 62% of Millennials believing so, compared to 53% of Gen Xers and 54% of Boomers.
“What’s very interesting is that two-thirds of respondents said they would leave their job if an employer took away a financial wellness benefit that is important to them,” says Cindy Dash, Senior Vice President at Matrix Financial Solutions, a Broadridge company. “In navigating the aftermath of the pandemic, employers are going to face increased pressure to provide enhanced financial wellness benefits, especially if they reduced their offerings during the pandemic.” If not, Dash says, they will risk losing their valued employees.
Smart Findings
A similar survey of more than 2,600 U.S. adults conducted by YouGov on behalf of retirement tech firm Smart in November 2020 found that 78% of those aged 55 or older have concerns around finance in retirement and 13% are planning to delay their retirement due to the pandemic. When asked what age they plan to retire, nearly 4 in 10 respondents in this age cohort said between ages 65-69, while 18% reported 70-79.
“COVID-19 has impacted our lives today as well as our futures, and this survey confirms that these shifts are changing the nature of retirement fast,” says Jodan Ledford, CEO of Smart USA. “We know that people are rightfully concerned about their retirement income and are encouraged by the U.S. government’s moves with the SECURE Act to widen access to retirement vehicles for the American public as well as its focus on retirement income generation.”
Smart’s survey also found that people aged 55 or older want control and flexibility from their retirement options. According to the findings:
- 36% would like to receive advice on how much they can safely withdraw each month without running out of money;
- 38% want to have the ability to change their income if their financial needs change; and
- 19% would like to receive a guaranteed income or annuity.
In addition, a third of respondents say they would like to receive advice from their retirement plan provider, but only 9% cite their plan provider as one of their most useful sources of advice.
Participants also report that they value clear communications and online tools from their retirement plan providers, according to Smart. The firm notes that 43% prioritize receiving clear, simple communications about their retirement savings, while 42% value online tools for checking account balances and 40% for accessing income.
