Employees Falling Short of Retirement Objectives

Most employees are not on track to meet their retirement goals, motivating them to improve their understanding of retirement readiness, fundamental investment strategies and other financial wellness topics, according to Qualified Plan Advisors’ second annual Financial Wellness Report.

The statistics, while alarming, align with much of the retirement industry’s recent push to provide financial wellness programs and resources to employees alongside 401(k)s and other savings programs. Such resources and tools would also go toward overall mental wellness for employees who are stressed about financial topics ranging from budgeting to retirement security, according to the advisory.

“Employees are actively looking to their employers for support to improve their financial well-being,” Makila Hennig, director of financial concierge at Prime Capital Investment Advisors, which provides product and advisory services for QPA, said in a statement. “Employers need to answer the call and take action to help minimize the financial stress felt by their employees. Financial wellness programs have shown to increase employee satisfaction and productivity, while creating a culture of support.”

Retirement Readiness

When surveying an employee pool across about 75 organizations, QPA found that 72% find themselves off course in achieving their retirement objectives, have yet to establish a retirement goal, or possess a goal but are uncertain about their progress.

Among respondents, just 19.04% feel they are on track to meet their retirement goals. This group represented individuals who have set objectives but are struggling to make progress.

Another 34.83% of employees admitted they have not set any retirement goals at all. Additionally, 18.42% of employees said they set a retirement goal, but do not know how to track their progress.

Meanwhile, just 27.71% of employees have well-defined retirement goals and are confident in their retirement futures, leaving plenty of room for support.

Overall, men fared slightly better than women when it came to planning, with 64% of men saying they are not on track for retirement, compared to 77% of women.

When it comes to age, younger workers were much more skeptical than those closer to retirement, with 80% of individuals under 30 saying they are not on track, followed closely by 82% of those aged 30 to 45. For the 45 to 60 age group, that percentage dropped to 66%, and for those over 60, it further decreased to 55%.

The consequences of financial stress also affect various other aspects of employees’ lives, perhaps exacerbating overall confidence levels, according to QPA.

Mental health issues and sleep problems top the list, each affecting 31% of workers. Debt is also a common burden, with 80% of employees carrying some form of it. The most prevalent types of debt include mortgages, credit cards, and student loans.

Financial Education Needs and Interests

Aligned with the statistics indicating deficiencies in retirement preparedness, investment acumen, and financial readiness, employees have pronounced interest to expand their knowledge concerning retirement readiness, foundational investment principles, and estate planning.

Employee’s interests vary, but include:

• Budgeting: 31%
• Retirement readiness: 22%
• Investing basics: 20%
• Estate planning: 16%
• Debt management: 11%
• Emergency savings: 8%
• Insurance coverage: 7%
• Credit score: 4%

When it comes to these areas of interest, there is a strong belief among employees that their employers should play a role in their financial well-being, with more than 70% of employees express agreement or strong agreement regarding the importance of employers assisting them in achieving financial well-being.

Furthermore, 70% of employees prioritize job opportunities that include a financial wellness program within their benefits package, while 65% of employees consider financial wellness programs an essential factor when choosing a job.

QPA’s survey was delivered to participating clients from March 4 to March 31, 2024. It tracks the financial IQ and wellness of 646 employees within 76 organizations.