As worries about inflation and continued market volatility run high, a new survey finds many workers are replacing their dreams of a lavish retirement with simpler goals.
According to the Principal Financial Group survey, 71% of workers said their main goal in retirement was to “maintain my standard of living,” followed by not outliving their retirement savings (47%). Less than half (44%) of respondents said that splurging periodically in retirement was a priority.
The biggest concerns workers say they have in retirement are maintaining a healthy lifestyle, enduring market losses, outliving savings and meeting day-to-day expenses. Additionally, 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 occasional splurges on their favorite activities or travel destinations is the ultimate goal of retirement,” says Sri Reddy, senior vice president of retirement and 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 American workers.”
When it comes to workers’ financial priorities, 40% of respondents said they feel behind in their retirement savings. Yet planning for retirement also remains a focus for the same percentage (40%) of workers, who cite activity as their top financial priority, followed by debt reduction (37%) and date or creation of a will, trust or estate plan (30%).
This financial guidance is especially true for workers changing careers in today’s job market, as labor issues continue to plague employers, notes Principal. Although 76% of workers feel satisfied with their current job, many would consider leaving for a higher salary and better pension benefits.
When respondents were asked if they were considering changing jobs, “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
For this reason, many employers are taking an increased strategic approach to recruiting and retaining talent. To that end, Principal found that top strategic business priorities for employers over the next 18 months include:
- hire and retain talent (69%);
- employee engagement, company culture and work flexibility (43%); and
- managing employee workload and burnout (39%).
Additionally, plan sponsors appear to be focused on providing options to help meet employees’ current and future retirement planning needs. Nearly 9 in 10 (88%) plan sponsors 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 training can help employees better prepare for retirement.
There may be a disconnect, however, with how workers actually use the programs offered by their employers, Principal further observes. According to the results, only 35% of workers participate in financial wellness programs and 46% do not even know if they are available.
As such, the company suggests that providing and promoting financial wellness education alongside retirement plan benefits can help employers demonstrate that they are invested in wellness. finance of their employees.
“While many financial factors are beyond our control, there are individual decisions, both at work and in our personal lives, that can help us maintain our financial security,” adds Reddy. “The good news is that employers can take advantage of these moments of focus to increase awareness, engagement and results for workplace pension plan members. »
Nearly 1,000 US consumers and 215 retirement plan sponsors who have at least one financial product or service with Principal participated in the study in March.