Employees Need Help Planning, Not Just Saving, For Retirement

What Employees Are Saying: In August 2024, we conducted a survey, and 2,543 employees from hundreds of organizations across the U.S. responded to the following questions:

Question 1: Are you confident in determining when you will start your Social Security retirement benefits? 24% said Yes, and 76% said No.¹

Question 2:  Have you done any calculations or analysis to help you determine how much you need to save for retirement? 46% said Yes, and 54% said No.¹

The Urgency of the Situation

The exact same survey questions were asked in August of 2023, and the responses were almost identical. Employees need help, and many don’t seem to have made any progress with getting that help. HR and Benefits leaders have an amazing opportunity to provide and properly promote a financial well-being program. When leaders do not take action, they allow their workforces to maintain high financial stress and low confidence for the future. This often translates into less engagement and productivity in the workplace.

The Financial Well-Being Imperative

The lack of understanding about vital financial matters, like social security and retirement planning, can lead to employees vastly underestimating how much savings they will need to sustain their retirement lifestyles. According to the Social Security Administration, Social Security benefits represent about 30% of the income of the elderly; however, 12% of men and 15% of women rely on Social Security for 90% or more of their income.² Understanding what one might receive in monthly Social Security benefits is a critical component of any retirement plan.

Regardless of age or background, all employees can benefit from financial education.

Here are two of the most common questions employees ask MSA Money Coaches with respect to Social Security and retirement planning:

If I’m in my 20s or 30s, why should I care about Social Security or a retirement plan? It is very difficult to prioritize retirement savings when you are in the early stages of your career or growing a family. However, money saved, properly invested, and allowed to compound over many decades, can represent a large portion of a person’s retirement savings. The younger generations of the workforce need a mentor or coach to help them create and sustain a balanced monthly budget that includes contributing to a retirement account and funding other goals or aspirations.

If I’m in my 40s and 50s, is it too late to start saving for retirement? It is never too late to start saving for retirement! Many people are in retirement for 20-30 years. Even if you get a late start, it is important to estimate your monthly and annual retirement lifestyle budget and determine how you will generate the necessary income. If you have less savings, you might need to work longer or part-time.  Given the maximum contribution limits for most employer-sponsored retirement plans ($30,500 in 2024 if someone is over 50 and $23,000 if someone is under age 50), a person can make up a lot of ground by maximizing their contributions annually.

A Strategic Priority for HR & Benefits Professionals, as well as Individuals

As an employer, consider the following step:

Action Step: Provide your workforce with a financial well-being program that emphasizes financial literacy or education. Employees typically need to work on goals, such as creating a budget, reducing debt, or rebuilding their credit, before they can start growing their retirement savings. Make sure your program emphasizes one-on-one unbiased and confidential coaching so that employees can work on whatever personal finance challenge is causing them the greatest stress.

As an employee, consider the following step:

Action Step: Use the resources your employer is providing for financial well-being. If you want to feel in control of your future and confident in your relationships, start by reducing your financial stress.

To learn more about the MSA financial well-being solution and how to help employees improve their overall well-being, contact us today.

¹ My Secure Advantage, Inc. August 2024. Based on MSA Member self-reported live event data.

² “Fact Sheet: Social Security.” Social Security Administration. Web. https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf. Accessed 15 Oct. 2024.

My Secure Advantage, Inc. or any of its representatives do not endorse any of the websites or company names listed here.