Thu, 15 April 2021 | employment retirement
One year into the COVID-19 pandemic, business leaders remain focused on helping employees manage the impact of recent market volatility on their retirement plans, according to the latest quarterly Principal® Retirement Security Survey1. More than 75% of employers say they are doing their part by providing the education and resources needed to plan for retirement, yet half of employers also say they are concerned about the overall low preparation for retirement on the part of their workers. Nearly half of workers surveyed say they are somewhat or very confident about having enough money saved to live comfortably through retirement.
“The latest findings showcase employers’ continued dedication to supporting their employees’ retirement readiness, as well as their overall financial wellness. This is all while managing the challenges of running their businesses during a global pandemic and a market environment they remain cautious about,” said Sri Reddy, senior vice president, Retirement and Income Solutions at Principal Financial Group®.
As a leading retirement solutions provider, Principal® works with a diverse group of collaborators to help workers and retirees with varying financial needs. Given the important role played in helping workers save for retirement, Principal added employers to this quarter’s Retirement Security Survey. In addition to insights from workers and retirees, the survey includes small and medium-sized business leaders’ concerns and actions surrounding retirement, financial behaviors related to market volatility, and COVID-19.
Among the report’s key findings:
Economic outlook remains cautious. The majority of U.S. employers surveyed have remained committed to providing benefits and financial resources throughout the pandemic to help employees manage savings and income in retirement.2 COVID implications are top of mind for employers, with many reporting concerns about its long-term financial impact. More than half of employers express caution regarding the economic outlook for the next year (53%). This is a shift from July 2020, when 40% of employers expressed caution.
Employers are concerned about how their employees will fair once in retirement as well as talent retention and attraction. They share top reasons they continue to offer retirement plans, despite challenges posed by COVID:
Half of employers are concerned their employees are not planning enough to manage their savings and income in retirement. Just 16% of employers feel most of their employees are saving adequately for retirement.
More than half of employers expressed desire to make retirement income options available to plan participants (nearly 60%).
“Effective employee engagement can help workers prepare for retirement,” said Reddy. “In addition to financial wellness education, we actively encourage the adoption of auto features including plan reenrollment as well as retirement income solutions. Connecting workers with the right resources and plan features can help them recognize their options and feel more secure about their path forward.”
When it comes to employees boosting their retirement readiness, employers highlight several opportunities for improvement:
Employers see retirement readiness as an important part of overall financial wellness. Employers report if they could encourage their employees to take action in 2021 to improve their financial health, they would focus on increasing employee savings rates or deferral percentages within the retirement plan (37%) and help employees start saving in the plan offered, if eligible (31%).
Source: Principal