Some good news on a couple of fronts in a new report today from Bank of America, as more American workers are feeling financially well this year compared to last year, and there’s been a 10% drop in the number of employees concerned that economic uncertainty will affect their long-term retirement savings.
“Despite concerns about the cost of living and plans to limit expenses, more employees are feeling confident about their financial well-being.”
Bank of America’s Lorna Sabbia
Bank of America’s 14th annual Workplace Benefits Report, “The Resurging Workforce,” found 47% of American workers feel financially well, up from 42% at this time last year. Conducted in partnership with Bank of America Institute, the report also found that 53% of employees are concerned that economic uncertainty will affect their long-term retirement savings, down from 63% in 2023.
“Despite concerns about the cost of living and plans to limit expenses, more employees are feeling confident about their financial well-being,” said Lorna Sabbia, Head of Workplace Benefits at Bank of America. “However, there is still work to be done to address gender equity, as women continue to report much lower financial wellness scores than men.”
Indeed, the gap in financial wellness between men and women continues to grow, with 53% of men reporting good financial wellness compared to 36% of women. In addition, employees expressed concern about inflation, with 76% of workers saying that the cost of living is outpacing growth in their salary or wages, compared to 67% in June 2023.
The research also found American workers are beginning to re-prioritize retirement savings. The number of employees prioritizing long-term retirement savings is slowly trending upwards (33% today, up from 31% in 2023—but is was 45% in 2022). This has become their top financial goal, overtaking those focused on short-term financial needs last year.
Based on nationwide surveys of nearly 1,000 employees and more than 800 employers, the report analyzed employee financial well-being and retirement preparedness, the state of the workplace, benefits trends and more.
More key insights
- 6 in 10 workers are limiting current expenses. Many employees say they are taking proactive steps to improve their financial wellness, including limiting expenses (62%), paying down debt (43%) and adding to emergency funds (41%).
- Job loyalty remains high. 70% of employees plan to keep their jobs for the next year, with good work/life balance as the top reason employees want to stay (66%). Of those who plan to leave, compensation (52%) was the top reason for the switch, followed by career growth (45%).
- Pay equity is becoming a powerful recruitment tool. Only 44% of employers currently address pay equity. However, those with pay equity initiatives in place notice an impact, with 78% reporting an improvement in attracting top talent vs. 50% without such initiatives.
- There’s a potential disconnect in retirement health care expenses. Most Americans drastically underestimate the cost of health care in retirement. Current research shows that a retired 65-year-old couple could need more than $350,000 in savings to cover their retirement health care expenses. However, according to this new Bank of America report, only 7% of employees think their yearly health expenses in retirement could total even $10,000.
- There’s a divide between working caregivers and employers. While most employers (81%) say they offer support to caregivers, 61% of caregivers are not aware of available support. This is significant, considering a little more than half of the employees (52%) we surveyed identify as caregivers, and 49% of caregivers are not comfortable self-identifying to their employers.
- Debt assistance is emerging as an attractive benefit. Employers are starting to explore ways they can support employees with debt, with 37% now offering student loan repayment assistance.
- Wellness reimbursements are becoming a new benefit trend. According to the data, 48% of employees want their company to offer a Lifestyle Spending Account (LSA), which can help employees pay for a range of wellness expenses and encourage healthy behaviors. Examples of qualified expenses may include gym memberships, mediation classes and camping supplies. However, only 29% of employers currently offer an LSA.
More findings are available in the Bank of America 2024 Workplace Benefits Report.
SEE ALSO:
• Short-Term Financial Needs Infringing on Retirement Saving: BofA Report
• New Portfolios from Merrill Designed to Provide BofA Clients Predictable Retirement Income