Retirement delay? 4 out of 10 workers hitting a snag due to inflation

The impact of inflation on the cost of living, general economic conditions and rising interest rates have seven in 10 employees reporting that they are worried a great deal about the economy.

“Coming out of the pandemic, we were hopeful to see continued improvements in financial well-being, but our results showed how quickly an uncertain economy can take those gains away,” said Aimee DeCamillo, head of global retirement for Manulife Investment Management.

The latest John Hancock Retirement stress, finances and well-being: driving behaviors that matter report found that:

• Almost four in 10 (38%) of workers expect they will retire later than planned, up from the 24% of plan participants surveyed by John Hancock Retirement last year.
• Nearly all respondents have taken note of rising costs in the past six months, with the vast majority reporting increased spending on groceries, household basics, gas and monthly bill payments.
• 58% of workers are significantly worried about one or more aspects of their personal finances, with saving too little for retirement, credit card debt and building emergency savings among the most common concerns.
• Employees now are more than twice as likely to describe their personal finances as fair or poor (42%) as they are to call them good or excellent (20%).
• As household budgets are strained by inflation, one in three respondents said it currently is challenging for them to save money, and one in five has dipped into savings to be able to afford day-to-day necessities.
• Overall, mental health has seen a positive shift since last year, with 65% describing their mental health as good, compared with 53% previously. Despite this improvement, seven in 10 said the challenging economic backdrop has had some impact on their mental well-being, with 16% of those saying it’s had a major impact.
• A closer look at the data shows stark generational divides in mental well-being, with three-quarters of boomers saying their mental health is good or very good, compared with less than half of millennials who said the same

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Employers can play an important role in helping improve the financial well-being of their workers. Employees who engage with their retirement plans digitally — by logging in to the plan website or opening email communications from their plan — are more likely to report that they are in good financial shape and on track for retirement than their less-engaged peers. The plan participant data show that employers that are able to engage their employees regularly with relevant, timely information may be helping them take financial action, including increasing their retirement contribution rates.

In addition, employees themselves said that financial wellness programs reduce their financial stress (82%), make them more likely to stay with their employer (78%) and make them more productive (70%). However, only three in 10 said their employer offers a wellness program, while 41% are unsure. Current economic conditions represent a clear opportunity for employers to either launch programs for their employees or make a more concerted effort to educate them about their existing programs.

“The good news is that it is clear that supporting employees through financial wellness programs and working to get them engaged in their personal finance benefits is likely to help boost overall employee satisfaction, retention and productivity,” said Wayne Park, CEO of John Hancock Retirement.