So what can employers, particularly small and midsize employers, do to bring more financial stability to their businesses, as well as to their employees? We talked to some financial experts to gather more insight into the financial market, and into what can be expected in the coming months.

Are we really headed for a recession?

Yes, there is talk of recession, but are we really headed for one? “Recession. The word invokes concern most times it is uttered but it’s critical to know what one is, how often they happen, and what are the signs of one being imminent,” said Heather Winston, CFP, head of product strategy at Principal Financial. “First, recessions are declared by the National Bureau of Economic Research when economic activity declines for more than a few months and has spread across various parts of the economy.
 
“While recessions generally happen following some significant shock to the economy — in recent history the pandemic was an example of this — there is no surefire way to ‘recession-proof’ your retirement savings. However, there are tangible steps savers of all ages can take right now to protect their finances and even grow their wealth in volatile economic environments.”  
 
First and most importantly, employees need to take stock of their unique financial goals and keep their emotions in check so they don’t do anything rash like selling all their investments. Having a financial plan can help them to proactively prepare for what is to come and provide comfort that all is not lost.
 
If employees have a long time to retirement, they should “stay the course with long-term investments in the stock market, including [their] employer-sponsored retirement plan and other accounts…,” said Winston. “While this may be the first significant talk of recession since the pandemic, it won’t be the last time Gen Z and millennial savers hear of things like this. Playing the long game is critical here, otherwise upside opportunities that come from market recoveries may be missed.”
 
If employees are closer to retirement, “let’s say five years or less, now is the time to begin planning [their] strategy for retirement income and make sure it reflects [their] specific needs," Winston said. "There are numerous ways to build this strategy, but we find that most people have greater comfort if they plan how they will distribute what they have saved with specificity.” These employees may find it may be more critical to think about the timing of their retirement, the closer that date looms.

Perhaps employers should encourage pre-retirees to “consider working for an additional year or two to capitalize on things like health care coverage … or maybe delay taking Social Security benefits a little longer so [their] monthly benefit amount is larger," Winston said.
 
Employers might advise employees to “consider working with a financial professional who understands [their] personal financial situation and long-term goals to avoid reacting emotionally to market downturns” and to help them plan for what to do next, she added.

Encourage pre-retirees to stay the course

“One of the biggest risks to investors is abandonment risk – the danger that an investor, rattled by market volatility, makes changes to their long-term strategy at precisely the wrong time,” said Mike Reidy, managing director, Principal Asset Management. “The consequences can be particularly devastating to retirement outcomes. A missed market rebound can permanently reduce retirement income and quality of life in retirement.
 
“A bit of volatility is normal. The average year sees a U.S. stock market drop of -13.5%, yet most years still end in positive territory, averaging 9% gains. Staying invested, even during downturns, is critical to long-term success.
 
“Abandonment risk is especially acute for those near or in retirement, whose lower risk tolerance makes them more vulnerable to emotionally driven decisions. Risk tolerance declines with age, making abandonment risk especially dangerous for retirees and those nearing retirement. A small drawdown can trigger withdrawal decisions that lock in losses and reduce retirement income.
 
“During the COVID-19 downturn, investors who stayed invested saw dramatically better outcomes than those who exited. Staying the course allows investors to harness market recoveries and avoid long-term opportunity costs.”

Roll out financial wellness

“Employers can help by creating financial wellness programs that offer education, coaching, and smart tools, many of which are cost-neutral or already baked into existing benefits,” said Dunn. “Even simple things like flexible work schedules, pay transparency, or better communication around existing resources can move the needle. The goal isn’t to solve every money problem, it’s to create an environment where people aren’t ashamed to admit they need help and can actually access it.

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“Start by removing the shame. Most employees are terrified to admit they’re struggling financially, especially in professional settings. Employers can shift that by talking openly about financial wellness, offering anonymous coaching or Q&A sessions, and weaving personal finance into existing well-being initiatives. Make it normal. Make it judgment-free. And please, don’t just roll out a budgeting worksheet and call it a day. Employees need empathy, real talk, and practical tools, not just another financial literacy lunch-and-learn.”

Give workers a financial ‘cushion’

Also, Dunn added, if feasible, “letting someone work from home, just a couple days a week, puts real money back in their pockets. It's an instant raise without touching payroll. Inflation punches everyone in the wallet. Remote work gives them a little more cushion to absorb the hit.”