Four in ten older American employees say they are delaying retirement due to rising living expenses. Currently, those delaying retirement are twice as many as indicated they were delaying retirement a year ago due to the COVID-19 pandemic. The Nationwide Retirement Institute’s poll, released today, reveals widespread workforce effects resulting from delayed retirement.
Companies are experiencing widespread rippling effects on their staff, particularly younger workers. Thirty-six percent of private sector firms say they cannot hire new employees due to delayed retirements. In comparison, 34% say they cannot advance employees under age 35. Approximately the same proportion (35%) think it raises the cost of their health and benefit programs.
Employers also report that postponed retirements are currently affecting their employees’ well-being:
- Three out of ten companies report poor team morale.
- Almost the same proportion (29%) say it has harmed employees’ mental health, and 27% say it has reduced workforce productivity.
- Twenty-two percent believe it has negatively influenced employees’ physical health.
According to Amelia Dunlap, Vice President of Marketing at Nationwide Retirement Solutions, delayed retirements can affect a company’s overall personnel lifecycle by unwittingly contributing to “silent quitting.” She said, “Without the option to reward employees for a job well done, employers may find themselves with a staff that lacks the drive to go above and beyond.” Employers should explore ways to support their aging staff better as they approach retirement.”
Employees are concerned about their long-term security as financial demands rise.
Employees lose faith in their retirement security as the economy continues to deteriorate. Less than six in ten American workers have a positive outlook on their retirement plans and financial investments. About one-quarter of workers (24%) believe they are on the wrong path for retirement—a significant decline from 2021 (58% vs. 72% in 2021). Inflation is the biggest retirement concern for two-thirds of employees (66%) (vs. 53% in 2021).
Employees’ top financial goals are to cover their living costs in retirement and to have a steady income. However, younger professionals aged 35–44 are more likely than those 45 and older to be confused (21%) or panicked (16%) about their retirement plans and investments.
When comparing the public and private sectors, the survey finds that government employees are far more positive about their retirement security than private sector employees. Only 28% of government employees anticipate postponing retirement due to inflation, compared to 41% in the private sector. Comparatively to 56% of their private sector counterparts, 75% of government employees believe they are on the right track regarding being financially prepared for retirement.
Employers must now invest in solutions and perks that help their employees improve their financial security. An adequate solution would also offer employees greater confidence that they will be able to retire “on time.” The private sector has a chance to invest in solutions that the public sector already offers, such as in-plan guaranteed lifetime income solutions. They, like pensions, provide a consistent stream of predictable income for life.
Alternative investments that promise a steady stream of income for life have improved in terms of interest rates.
More than half of workers are interested in target-date funds that offer guaranteed lifetime income investment possibilities (53% vs. 42% in 2021). Almost half (48%) are interested in contributing to various investment alternatives through a managed account. More than four in ten employees (41%) said they would roll over retirement assets into a guaranteed lifetime income investment option if they could, a six-point rise from 2021.
Similarly, with the addition of guaranteed lifetime income investment options within employer-sponsored retirement plans, most employers report high levels of favorability (75% private sector and 86% government), interest (69% private sector and 70% government), and comfort (64% private sector and 73% government).
Employees cannot contribute to these investment possibilities due to a lack of access and knowledge. Only roughly a fifth of employees (21%) are aware of guaranteed lifetime income investing possibilities. Employees (42%) and plan sponsors (38% private sector, 32% government) both regard a lack of information as the most significant obstacle to not contributing to one.
Research demonstrates that companies and employees realize that guaranteed lifetime income guarantees that workers are safeguarded against inflation and market volatility. This ensures that individuals will not outlive their assets. Employers should work with their retirement plan advisor or consultant to identify the most favorable investment alternatives.
Contact Information:
Email: [email protected]
Phone: 2624906519
Bio:
Thomas Sweet has 30 + years as a Financial Planner. Securities (Series 1,7, and 65) and Insurance Licensed. Retirement Planning including the actual planning of where your income will come from as well as a discussion of products to get you there. The market has been volatile since Covid broke out and many people are not comfortable with this. If you are retired we will look at your total income and tax situation. If you are still working we have some more time to plan.
