Part Three: Expectations for Employers
THREE KEY TAKEAWAYS
- Participants want—and largely expect—their employers to help them save for retirement.
- Most also want help with overall financial wellness.
- Most want a professional involved in their financial decisions.
1. PARTICIPANTS WANT—AND LARGELY EXPECT—THEIR EMPLOYERS TO HELP THEM SAVE FOR RETIREMENT
Nearly nine out of 10 surveyed participants identify retirement benefits as an important factor when deciding to stay with their current employer or consider a new employment opportunity (EXHIBIT 7). Similarly, 92% ranked their retirement plan benefit as “extremely” or “very” important for improving their financial wellness, followed by health insurance and paid time off/vacation/sick leave, at 90% and 89%, respectively.
Nearly 90% consider retirement benefits important in choosing an employer, and 75% believe employers have a responsibility to help them save for retirement
EXHIBIT 7A: RETIREMENT BENEFITS ARE AN IMPORTANT CONSIDERATION IN DECIDING TO STAY WITH AN EMPLOYER OR CONSIDER NEW OPPORTUNITIES
EXHIBIT 7B: VIEW ON EMPLOYER RESPONSIBILITY TO HELP EMPLOYEES SAVE FOR RETIREMENT
Most (75%) believe their employers have at least some responsibility to help them save for retirement, similar to past survey findings. This is even more pronounced in participants under 30 years old (89%).
2. MOST ALSO WANT HELP WITH OVERALL FINANCIAL WELLNESS
Employee financial wellness programs continue to gain traction, covering not only retirement planning but also key areas such as budgeting, debt management, health savings and building emergency funds. Our study found that nearly seven out of 10 participants believe that their employers have responsibility to help employees with their financial wellness—this is an even stronger belief for participants under age 30 (80%). More than nine out of 10 participants feel that financial wellness programs are an important benefit. Yet just over half say their employers offer these types of services (55%).
Surveyed participants most frequently identify “saving for retirement” as one of their top three financial priorities (69%), followed by “paying off debt” and “building sufficient emergency savings” (35% and 33%, respectively). Younger participants are more likely to focus on paying off debt, whereas building emergency savings is more of a universal goal, with three in four overall respondents interested in an employer-sponsored savings account where they could make after-tax contributions.
When asked to allocate a hypothetical $500 into different savings vehicles, participants put the highest average amount in retirement savings accounts ($197.80), followed by an emergency savings account ($134.10) (EXHIBIT 8). The remaining amount is used to help pay down debt ($72.90), placed in a health savings account ($60.80) and a transportation savings account ($34.40). Younger participants strongly favor contributing to an emergency savings account first, until it reaches a certain amount, then putting the rest into a retirement account.
Retirement savings would capture the largest part of allocations to a broader financial wellness program, followed by emergency savings
EXHIBIT 8: HOW THEY WOULD DISTRIBUTE A HYPOTHETICAL $500 AMONG ACCOUNTS
Clearly, retirement remains a top priority, and emergency savings accounts may be an effective first step to get younger participants used to saving. Additionally, participants with healthy savings accounts are less prone to steal from their future selves by dipping into retirement savings if an unforeseen expense pops up.
3. MOST WANT A PROFESSIONAL INVOLVED IN THEIR FINANCIAL DECISIONS
Only 30% of surveyed participants prefer to research investments on their own and make their own decisions. Seven out of 10 want at least some help from a financial professional, with 38% wanting investment suggestions before making their own decisions, an additional 22% usually just following a financial professional’s advice and 10% preferring a financial professional to make decisions for them. Four out of five respondents would be willing to meet with a financial coach made available through their employer. However, most—58%—would only do so if it was free.
The benefits of having this advice are clear. Participants working with a financial professional experience a positive influence on their behavior and confidence in almost all areas of plan investing, from how much to contribute to what to invest in to whether or not they are on track with their retirement savings (EXHIBIT 9).
Working with a financial professional provides greater confidence
EXHIBIT 9: NUMBER WHO SAY THEY ARE HIGHLY CONFIDENT ACROSS VARIOUS ASPECTS OF RETIREMENT PLANNING
Offering a robust retirement plan continues to be an important benefit to help attract and retain talent. By providing the proactive support and guidance that so many employees need and clearly want, employers can help differentiate their offerings. Plan sponsors should consider:
- Making saving for retirement within the plan as easy and efficient as possible by incorporating industry best practices, such as automatic programs and TDFs.
- Offering access to a financial professional that can help with retirement planning decisions, as well as other areas of financial health.
- Offering a more comprehensive financial wellness platform as an employee benefit.
Recordkeepers are increasingly partnering with companies that offer innovative tools specifically designed to help with employee financial wellness. There are also various financial health platforms available today that can work with employees to provide personalized advice on all financial fronts, including spending, saving and debt management.