According to a new report, two in three employees have cut back on contributions to retirement accounts—and an even higher percentage of younger participants have reduced contributions to their accounts.
New data released today from Morgan Stanley at Work’s third annual State of the Workplace Financial Benefits Study found 66% of employees (up from 62% in 2022) have reduced contributions to their accounts, citing inflation and/or concerns of a recession—particularly to 401(k) plans (33%), long-term savings (28%), and emergency and short-term savings (28%).
Gen Z (78%) and Millennials (80%) especially say they had to scale back on contributions compared to their Gen X (58%) and Boomer (40%) counterparts.
“This past year we’ve seen an economic climate that frankly a lot of workplace participants—especially younger generations—have likely never experienced before,” said Krystal Barker Buissereth, Head of the Executive Services at Morgan Stanley at Work. “As a result, financial wellness programs are becoming even more sought-after, and HR leaders can play a vital role by connecting employees with resources to help them navigate each step of their financial journeys.”
“These are the times when plan advisors shine by lending seasoned expertise and a steady hand to help ensure employee finances and investments are well positioned to weather whatever economic and market conditions may come our way.”
Morgan Stanley at Work’s Anthony Bunnell
The survey found financial stress is a key concern for employers and employees alike. More than 83% of HR leaders worry that employees’ financial issues could impact their productivity, while 66% of employees agree that financial stress is negatively affecting their work and personal life.
Retirement assistance and retention are increasingly linked. The vast majority (84%) of HR leaders now view retirement planning assistance as a high or top priority in retaining current employees, up from 76% last year. Similarly, 92% of employees said they view retirement planning assistance as a priority when choosing where to work. Drilling down further, nearly 3 in 5 employees now rank retirement planning assistance from financial professionals as a high priority when choosing where to work—including 25% who say it’s their top priority.
“Employees want and need greater support when it comes to long-term retirement planning, and while we’re seeing financial guidance being recognized as a priority for HR leaders, there is still more employers can do to support and retain talent,” said Anthony Bunnell, Head of Retirement Solutions and Deferred Compensation at Morgan Stanley at Work. “These are the times when plan advisors shine by lending seasoned expertise and a steady hand to help ensure employee finances and investments are well positioned to weather whatever economic and market conditions may come our way.”
Finally, the study also showed additional gains in the popularity of financial wellness programs. Nearly 9 in 10 HR leaders (89%) now say they offer such programs (a 10-percentage point gain over 2021).
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 third annual study, the business recently published its findings on equity and financial benefits.
SEE ALSO:
• Economy Forcing Cutbacks in 401k Contributions: Morgan Stanley