While more employees are participating in their workplace retirement plans, they are also responding to economic uncertainty by cutting back on their 401(k) contributions and looking for financial guidance through the workplace.
This according to just-released retirement findings from Morgan Stanley at Work’s fifth annual State of the Workplace Report, focused on HR and employee attitudes and priorities for retirement benefits amid increasing economic uncertainty. Morgan Stanley at Work, together with Morgan Stanley Institutional Consulting Solutions, which supports the retirement business, today announced retirement-focused data from the survey of 1,000 U.S.-employed adults and 600 HR leaders.
A key finding was that employees are indeed tightening their belts. While participation in 401(k) plans held steady year-over-year at 86%, financial stress is affecting retirement savings behavior. More employees are reducing 401(k) contributions specifically because they are concerned about economic impacts related to inflation or recession (39%, +3 percentage points year-over-year). This is particularly pronounced among Gen Z workers at nearly half (48%). Overall, 67% of employees say they are reducing their contributions across all savings accounts, up 4 percentage points since 2024.
The study found employees are looking for more comprehensive retirement guidance. When it comes to the most valued types of retirement planning assistance, access to a financial advisor is the top choice for employees, followed by goals-based retirement investment planning, and retirement income solutions. HR leaders ranked the same three choices among their top three (38% each)—showing clear consensus around the need for holistic support throughout the full retirement cycle.
Sixty-nine percent of HR executives believe access to retirement planning assistance from financial professionals is a top or high priority for employees when choosing where to work. A majority of employees agree (54%)—and even more so among those who participate in their company benefits (60%), who are also less likely to say that they need to accelerate their financial planning efforts to make up for lost time (82% vs. 90).
“Our findings emphasize that modern workplace retirement plans go beyond simply offering a 401(k) and match; they now integrate ongoing financial advisory, investment planning and income solutions.
Jeremy France, Morgan Stanley
“In the face of economic uncertainty, it is clear that comprehensive retirement benefits are essential for individual financial security, while also serving as a critical lever to retain top talent,” said Jeremy France, Head of Institutional Consulting Solutions at Morgan Stanley.
“Our findings emphasize that modern workplace retirement plans go beyond simply offering a 401(k) and match; they now integrate ongoing financial advisory, investment planning and income solutions. This next generation of workplace retirement plans—especially those which include ongoing planning and consultancy support—are a strategic asset that can help companies foster employee loyalty and business stability in any environment,” France added.
Additional details are available in Morgan Stanley at Work’s State of the Workplace Study here. As part of a series of findings from Morgan Stanley at Work’s fifth annual study, the business will publish its findings on equity and financial benefits in the coming weeks.
SEE ALSO:
• 3 Ways Financial Guidance Adds Value for 401(k) Plan Participants and Employers
• Demand for Retirement Income Planning Rising: Edelman Study
• Plan Sponsors Show Rising Interest for Consultancy Services
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.