New research from BlackRock shows that burnout doesn’t only extend to the workplace.
The BlackRock Read on Retirement survey finds that more individuals are experiencing “financial burnout,” as 30% plan to delay retirement while 56% feel “on track”—a 12% dip compared to 2021 and a 7% drop from last year.
The report surveyed 1,339 workplace savers, 1,319 independent savers without a workplace retirement plan, 465 plan sponsors, and 304 retirees.
Even as more workers expect inflation to completely cool by the end of 2023, 86% of workplace savers in BlackRock’s research are worried inflation will erode their savings. Ninety-three percent are concerned that market volatility will impact their savings, 71% are worried over outliving their savings, and only 21% are confident they will have enough money to last through retirement.
There is some good news, however: Despite the dip in confidence, workplace savers haven’t stopped allocating towards their retirement. “While the drop in confidence we’re seeing hasn’t translated to a decrease in saving rate yet, this moment matters,” said Anne Ackerley, head of Retirement at BlackRock, in a statement. “There’s an opportunity to shore up retirement confidence and help workers navigate an uncertain environment ahead.”
Still, that doesn’t mean workers haven’t faced setbacks in their savings. According to BlackRock, approximately 50% more workplace savers say that hardships related to high inflation and volatility have slowed their retirement savings compared to 2022.
Employers are also ringing alarm bells, BlackRock reports. Forty-six percent of plan sponsors surveyed are highly confident their participants will stay on track during periods of market volatility, and three in four employers are worried about inflation corroding participants’ retirement savings. Another three in four are concerned a potential recession will adversely affect participants in the next year.
Furthermore, 98% of employers feel responsible for helping their savers generate income, but most don’t feel highly confident that their plan can. In fact, while 61% of employers in 2020 were highly confident that their plan enabled savers to know how much of their balance can be spent each year in retirement, today only 37% of employers are, BlackRock reported.
Impacts to financial confidence
Economic concerns aren’t just impacting retirement confidence—it’s extended to participants’ holistic wellbeing, as well. Fifty-three percent of workplace savers report feeling anxious about a potential recession, while 45% say they feel frustrated and 31% are afraid.
Planning for the long-term, like retirement, tends to help these savers feel more grounded in their lives, they say. Eighty-seven percent report feeling happier and more confident because they are saving for retirement, and 80% are at least somewhat optimistic about their overall wellbeing over the next few years.
Guaranteed retirement income
Concerns over inflation and market volatility have savers searching for products that will guarantee retirement income and lessen their longevity worries. According to the findings, the top three things workplace savers want to know are: what their nest egg will be, how much they can spend each year in retirement, and how long their savings will last.
Eighty-nine percent of individuals believe having guaranteed retirement income would positively impact their current wellbeing, and 71% say they would save more if their plan offered them a guaranteed retirement income solution.
Additionally, when asked what their top workplace wish lists are, one in three said they would want to know the amount they can spend each year in retirement, and one in four want to know how long their savings might last for.
Growing interest in retirement planning tools
BlackRock’s findings show a rising interest in retirement planning strategies and advice, as more workers seek protection from downside risk, show interest in active management, and a need for guidance and education.
According to the research, 77% of workplace savers believe it would be helpful if their plan provided specific education around the investments available, and 84% say they plan to engage with their retirement accounts more frequently as they approach retirement.
While 41% of workplace savers say they aren’t familiar with active investing strategies, interest in this type of management remains strong among investors and plan sponsors, BlackRock finds. Eight in 10 savers reported interest in utilizing an actively managed fund, and 72% of sponsors believe that active managers can consistently outperform. Just over half of plan sponsors say they value active management now more than before due to past market volatility and performance.
With more savers and plan sponsors valuing retirement planning tools, more are leaning on the professionals, too. Twenty-one percent more savers now prefer to have a professional manage their investments compared to doing it themselves, with 56% of the general population and 71% of Gen Z savers reporting insecurities in handling their investments. Gen Z workers were especially prone to seek out a financial advisor through their employer.
“American workers – particularly, Gen Z, are asking for help to plan for their future,” Ackerley continued. “It’s our responsibility as an industry to provide them the solutions and tools they need to build more resilient retirement plans.”
SEE ALSO:
- Investors Expect Inflation to Normalize by End of Year
- 1 in 5 Fear Never Being Able to Retire
- More Americans Believe Their Financial Planning Needs An Upgrade
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.