(PlanSponsor) - Employers are being challenged to help their employees who are feeling strained because of their personal finances, as more workers expect to delay retirement, new information from John Hancock shows.
Almost four-in-10 (38%) workers expect they will retire later than planned, up from the 24% of plan participants surveyed by John Hancock Retirement who said the same last year, finds the Stress, Finances and Well Being report from John Hancock Retirement a division of Manulife Investment Management.
“The levels of stress and worry in the report are troubling, particularly among millennials especially given the uncertain economic times we are experiencing,” states Wayne Park, CEO, John Hancock Retirement, in a press release with the report.
Retirement savings took a step backward in 2022, with 56% of workers saying they have fallen behind in saving for retirement, compared with 43% who said the same in 2021, the report finds.
Retirement plan participants are being challenged by macroeconomic shifts—rising costs, higher interest rates, meek economic growth and stock market volatility—in 2022, with a spillover effect for some participant’s savings shrinking, finds the report.
Across demographics, this has heightened workers’ anxieties about being able to afford basic expenses and health care in retirement, the report finds.
Anxieties may be increased for certain cohorts and anxiety about basic expenses is an issue for 63% of households earning $50,000 or less, 54% of single individuals, 51% of women and 49% of Gen X workers ages 41 to 54, finds the report. Nearly one-fifth of workers have recently dipped into their savings to pay for daily life and one-third are concerned they don’t have enough money for emergency expenses, according to the research.
Building emergency savings is also a struggle for many workers, the report finds.
The concern is significantly higher for certain workers, as building emergency savings is a struggle for 77% with major debt, 65% of respondents who withdrew money from savings and 60% who say their mental health has suffered because of the economy, the report finds.
Additional findings from the John Hancock Retirement report.
- Nearly three-quarters (71%) of respondents will be focused on growing, maintaining, or investing their savings in the coming months, with paying off debt 44% and planning for retirement 45% frequently cited as short-term goals.
- Four-in-five employees say they are unlikely to work for a company that doesn’t offer a retirement plan.
- While roughly half 53% of respondents feel their current level of debt is problematic, it appears manageable for now as only 14% consider it a major problem and 61% say they’ve been able to make their payments without difficulties.
- Nine-in-ten employees said that learning about sources of retirement income, projections of income and connecting with an adviser would encourage them to do more to prepare for retirement.
“The good news is that it is clear that supporting employees through financial wellness programs and working to get them engaged in their personal finance benefits is likely to help boost overall employee satisfaction, retention and productivity,” Park added.
John Hancock advises plan sponsors to consider several the following to help participants.
- Evaluate your current level of support
- Assess your employee communication strategy
- Partner up to optimize your support; and
- Benchmark your offering
Data for the John Hancock Retirement report was gathered by research from Edelman Public Relations Worldwide Canada in November 2022. An online survey of 3,825 John Hancock Retirement plan participants was conducted between November 29 and December 14. Respondents were located from a list of eligible plan participants provided by John Hancock.
By Noah Zuss
April 18, 2023
