More workers feeling ‘financially well’: Retirement is top financial goal
Despite 47% of employees feeling financially well, there is still lingering concern over inflation, which is why employers need to implement retirement education programs and offer online financial tools, says a new report.
American workers are starting to feel better about their financial outlooks. According to a new report from the Bank of America Institute, 47% of employees reported feeling financially well, up from 42% in 2023. Despite the improvement, the report shows that there are still issues hamstringing employee financial wellness, lingering concern over inflation not least among them.
The 2024 Workplace Benefits Report, which surveyed a national sample of 955 full time employees and 804 employers, shows a number of encouraging developments. Perhaps most notable, employees concerned that economic uncertainty would affect their retirement and benefits dropped from 63% to 53% from last year. This improvement might be due to strategic planning on behalf of employees: 62% of employee respondents said they were limiting expenses, while 43% said they were paying down debt.
Despite the uptick in employee financial optimism, many American workers are still worried about inflation. According to the study, 76% of employees are concerned that the cost of living could outpace their paychecks. 66% reported feeling stressed about their finances.
The report gives some insights into employees’ financial goals and how employers can help workers achieve them:
- 33% of respondents reported saving for retirement as their top financial goal
- 20% answered paying off credit debt,
- 12% saving for unexpected expenses, and
- 10% paying off a mortgage.
To help employees reach such goals, the report’s authors recommend employers implement a number of programs:
- Retirement education and planning resources,
- Online financial tools,
- Calculators and/or scores to measure and improve financial wellness,
- Education to develop financial skills and good financial habits, and
- Platform with their information in one place with clear steps to help them identify and reach their goals.
There’s especially a lot of room for improvement when it comes to educating employees on health care in retirement. According to the report, many employees underestimate the cost of health care in retirement. Only 7% of employees anticipate spending $10,000 or more on health expenses in retirement, despite research showing that a retired couple should have $351,000 set aside for such expenses. The report’s authors suggest addressing this problem through education: Considering personalizing Social Security, Medicare and health care savings education to address concerns by life stage.
Provide up-to-date information on Social Security and Medicare as availability or changes occur, and expand educational opportunities on the features and benefits of HSAs at all levels in the workplace.
Beyond educational programs, the report sheds light on a number of benefits that are mutually beneficial to employers and employees. Lifestyle Spending Accounts (LSAs) help employees pay for a range of services while allowing employers to encourage healthy decisions. What’s more, 48% of employers and employees report interest in LSAs. Yet while 29% of employers offer LSAs, only 3% of employees report being aware of such offerings.
Related: New financial wellness benefits that can move the needle, keep workers from switching jobs
Health Savings Accounts are also useful programs that both employers and employees often don’t understand fully; 60% of employers reported having a strong understanding of HSA’s, down from 76% in 2019. Meanwhile, 50% of employees reported a strong understanding of HSAs, down from 57% in 2019.
Equity compensation is similarly mutually beneficial, enhancing job performance and company loyalty while boosting earnings. Lisa Margeson, Managing Director, Workplace Benefits Retirement Research at Bank of America, stressed the importance of equity compensation, saying: “Our 2024 Bank of America Workplace Benefits Report reveals the power of equity compensation as a tool to reward job performance and to attract talent. Findings from the Report underscore this, with 67% of employees saying equity compensation is either a factor or would entice their employment decision. This data is a reminder for employers to explore how equity compensation might help boost company loyalty as well as retain and attract talent.”