A Crisis in Retirement Confidence: Employees Aren't Financially Ready
Employees play a pivotal role in the success of every business. But are employers helping them achieve their own financial success in retirement? Statistics reveal that today's workers are not ready for what the future may hold.
More than 11,000 Americans turn 65 every day— and the majority may not be prepared to fund their retirement years.
According to a September 2023 study by ADP Retirement Services, 60 percent are substantially under-saving for their future needs, and individuals approaching retirement are especially at risk.
Somber outlook for average retirement savings
Prioritizing retirement planning and saving for retirement is key to building future financial security. But according to employees:
- 40% believe today's living expenses prevent saving
- 39% feel overwhelmed, stressed or fearful about their financial situation
- 25% of those with access to a workplace plan don't take advantage of the benefit
The average retirement savings by age highlights troubling truths. Sixty percent of workers reported 401(k) savings of $100,000 or less, and most have under $100,000 in outside savings — including more than half of those ages 50+.
Despite low average retirement savings, 28% are optimistic about their retirement finances, believing they're halfway or closer to reaching their savings goal. Unfortunately, 45% haven't calculated or don't know how much they need for retirement. According to our study, determining how much to save and projecting future expenses are specific areas of difficulty. One in four are counting on Social Security to provide half or more of their monthly retirement income.
Why employees' retirement savings matter to business owners
Financial wellness should be important to every employee, of course. But it's also important to the health of your business.
Annual employee financial wellness surveys continue to find that financially stressed employees are distracted at work and spending time on the job dealing with issues related to their personal finances. More than half are also more likely to leave.
Your workers are counting on you
Eighty-four percent of today's employees expect to rely on their workplace savings plan for retirement income.
By promoting a culture of proactive retirement planning, employers can help their workforce take the necessary steps to secure their financial futures. That's where ADP can help, with retirement plans that go beyond simply a static savings vehicle with features like these:
- Personalized insights, guidance and education resources to help individuals accurately calculate retirement needs
- Access to professional financial assistance to develop a custom financial strategy that considers current needs, personal preferences and future goals
- Financial wellness programs to increase financial well-being with educational resources about budgeting, managing expenses, debt reduction and Social Security benefits
As an employer, it's up to you to find a plan that inspires your team to get on the path to lasting financial wellness and bolster your team's median retirement savings by age 65. Connect with an ADP retirement planning services specialist to learn more or call (800) 432-401K .
ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.
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