(ASPPA) - With worries about inflation and ongoing market volatility running high, a new survey finds that many workers are replacing their dreams of a lavish retirement with simpler goals.
According to the survey by the Principal Financial Group, 71% of workers said their top goal in retirement is “maintaining my standard of living,” followed by not outliving their retirement savings (47%). Fewer than half (44%) of the respondents cited splurging periodically in retirement as a priority.
The biggest concerns workers say they have in retirement are maintaining a healthy lifestyle, enduring market losses, outliving savings and meeting daily expenses. In addition, workers planning for retirement are more concerned about their investments not keeping up with inflation (27%) than the cost of health care (25%).
“For most Americans, living comfortably with the occasional splurge on their favorite activities or travel destinations is the ultimate goal in retirement,” says Sri Reddy, Senior Vice President of Retirement & Income Solutions at Principal. “In the current environment of high inflation and potentially lower investment returns, we are seeing something of a retirement reset among U.S. workers.”
Financial Priorities
Looking at workers’ financial priorities, 40% of those surveyed said they feel behind in their retirement savings. Yet, retirement planning also remains a focal point for the same percentage (40%) of workers, who list the activity as their top financial priority—followed by reducing debt (37%) and updating or creating a will, trust or estate plan (30%).
This financial focus is especially true for workers who are making career moves in the current labor market, as workforce issues continue to plague employers, Principal notes. Despite 76% of workers feeling satisfied with their current jobs, many would consider leaving for a higher salary and better retirement benefits.
When respondents were asked about considering a job change, “benefits that will help my financial well-being” were among the top considerations (58%), behind “competitive salary” (79%) and a “good culture where I feel valued” (64%).
Recruitment, Retention and Well-being
Because of this, many employers are taking a heightened strategic approach to recruiting and retaining talent. To that end, Principal found that employers’ top strategic business priorities in the next 18 months include:
- hiring and retaining talent (69%);
- employee engagement, company culture and work flexibility (43%); and
- managing employee workload and burnout (39%).
What’s more, plan sponsors appear focused on providing options to help meet current and future employees’ retirement planning needs. Nearly 9 in 10 plan sponsors (88%) agree that their organization is responsible for ensuring employees have access to benefits that help maintain their financial well-being. Meanwhile, 87% agree that providing the right financial tools, resources and education can help employees better prepare for retirement.
There may be a disconnect, however, with how well workers actually utilize the programs offered by their employers, Principal further observes. According to the findings, only 35% of workers participate in financial wellness programs and 46% don’t even know whether they are available.
As such, the firm suggests that the offering and promoting of financial wellness education alongside retirement plan benefits can help employers demonstrate that they’re invested in the financial well-being of their employees.
“While there are many financial factors outside of our control, there are individual decisions both in work and our personal lives that can help us maintain financial security,” adds Reddy. “The good news is that employers can use these moments of focus to help increase workplace retirement plan awareness, engagement and outcomes among participants.”
Nearly 1,000 U.S. consumers and 215 retirement plan sponsors who have at least one financial product or service with Principal participated in the study in the month of March.
By Ted Godbout
July 7, 2022
