More employees are facing retirement challenges, but their employers can help bridge the gap.
A new study out today by Human Interest surveyed over 1,000 employees, finding that 83% of U.S. workers have regrets over their retirement planning decisions. According to the Retirement Roadblocks survey, 41% of Americans expect to retire later than planned and 83% plan to continue working after retirement.
Many respondents lamented over the delay in saving for the future, with 68% regretting not starting sooner. Nineteen percent did not begin saving until they were 41 or over, and 83% of those respondents say they wish they had started saving earlier.
Forty-eight percent of respondents who have taken out a loan from their 401(k) ended up regretting their decision, while 60% of respondents who have withdrawn money from their retirement account said the same.
Other common retirement regrets were investing too late (26%) or investing too small a percentage or amount of money (14%). Some wished they had enough financial knowledge to make informed decisions (13%), especially as 31% admit not knowing how much money they have saved for retirement, and 10% are unsure on how to find out.
The findings point to the pandemic for the rise in financial insecurity among Americans. Inflation brought on by the crisis, followed by a deceleration of economic growth, the loss of emergency savings for those out of work, and the resumption of student loan payments had put stress on common day-to-day spending and household budgets, Human Interest found. Not only has the pandemic’s impact touched hourly workers, but its effects have expanded to full-time employees as well, the data showed.
Human Interest’s report touches on the strong influence employer benefits can have on workers, especially in a time when workers continue to recover from the pandemic.
Employees who are offered workplace plans are not just likelier to make sound financial decisions but are significantly likelier to increase their savings potential. Past data from Human Interest found that median income workers without access to employer-sponsored retirement savings benefits had $624,400 less than workers who were enrolled in a Human Interest platform and who allocated over 7% of their income to retirement.
According to Human Interest’s latest survey, when employers offer education around general financial wellness, 91% of employees enroll in their employer-sponsored plan. When no education is offered, only 76% of employees are enrolled.
“These survey results validate the innovations that we continue to drive,” said Marc Fowler, Director of Education at Human Interest. “We’re bridging the retirement gap by providing customized retirement plans for every kind of worker, easy-to-use tools so employees are empowered to take control over their retirement planning, and access to the financial education workers need to make smart retirement decisions.”
Specifically, Human Interest urges employers to offer better onboarding and optimal plan designs, which can reduce barriers to commencing retirement savings. According to the findings, 44% of full-time workers described their onboarding experience as “suboptimal,” and 14% fully abandoned the enrollment process due to its complexity.
Increasing the employer match was also listed as a top change workers hope to see in their benefits strategy—approximately 43% of employees in the Human Interest survey said they would like their employers to contribute a higher percentage than the current rate, while 22% stated their employer do not offer any match.
“While this population can make changes to help reduce retirement regrets, such as investing in their 401(k)s earlier and familiarizing themselves with basic 401(k) management, we believe the greatest change can come from employers,” Human Interest stated in its research. “By providing greater access to financial wellness education and intentional plan design, we believe that workers may experience fewer regrets around their future retirement.”