Many Americans are concerned about old-age financial security, according to a recent study by Alight Solutions. Specifically, 39 percent of surveyed U.S. workers said that they are “very worried” or at least “fairly worried” about saving for their future retirement needs. Such concerns exist even as 79 percent of respondents reported that one of the main reasons why they regularly set money aside is to generate an adequate retirement income. Further, 77 percent of surveyed workers said that “being able to do what I want when I retire,” is a major motivating factor behind their saving habits.
One apparent obstacle in the way of greater retirement confidence is debt because more than three-quarters of respondents said that they carry at least some level of non-mortgage debt, with the average liability being $28,042. Nearly all surveyed employees (93 percent), though, said they believe it is important to be debt-free, and 60 percent reported that they feel they can properly manage their debt load on their own. All of this suggests that a potentially greater problem for many Americans is an overconfidence in their ability to manage their personal finances. Moreover, 69 percent of respondents described themselves as being “financially savvy,” and 23 percent said that they believe they annually max out their 401(k) savings.
However, only 6 percent of Americans actually contribute as much as possible to their tax-advantaged 401(k) plan each year, according to Alight calculations. Fifty-five percent of surveyed workers also said that they feel overwhelmed by the number of different ways they can invest their savings, and 43 percent reported that they are often intimidated by financial matters. One thing that may be able to help is outside financial guidance, especially when provided by an employer. Indeed, surveyed workers at firms offering some form of financial advice as a benefit were found to have a higher likelihood of saying that they “know the steps needed to ensure a comfortable retirement” and “feel in control of their financial future.”
Financial well-being participants were also more likely to be currently contributing to employer-provided defined contribution plan and regularly setting aside money for unexpected healthcare expenses. Further, surveyed workers taking advantage of well-being benefits were more likely to have estimated how much money will be needed in retirement, created a plan that details what is needed to achieve their long-term financial goals, and projected how to withdraw savings once in retirement. Perhaps more important, at least for firms looking to attract and retain talent, is that workers appear to highly value such benefits.
Eighty-eight percent of surveyed workers, for instance, said that they believe employers should help with retirement saving, and nearly half would like some sort of assistance with debt management, saving for short-term needs, and establishing an emergency fund. A majority of worker respondents also said that helpful services or tools an employer could provide are access to a personal investment advisor, online tools for investing and financial/retirement planning, and web-based tools that assist with general finances, debt management, and budgeting.
Sources: Alight SolutionsPost author: Charles Couch