Americans still feel woefully unprepared for retirement, but many would like help, if it’s available to them.
More than a third of employees say they aren’t doing well financially, including 44% of workers under 40 years old, according to a Bank of America Merrill Lynch Workplace Benefits report, which surveyed employees who participated in a 401(k) plan and employers who offer a 401(k) and a financial wellness program. Employees said they’d like a personal financial assessment to help them figure out what to do. “They want action steps and to-do’s,” said Gao-Wen Shao, director of retirement and personal wealth solutions at Bank of America Merrill Lynch. BAC, -0.35%
Another report, conducted by MassMutual, found preretiree and retiree women expect their income will only last 20 years, and think their savings will fall short by five years, compared with men who anticipate their income will last 25 years and include a two-year cushion. The Bank of America Merrill Lynch study also found women aren’t as comfortable with their finances than men, and that they need programs tailored specifically to them. Another challenge women face: they tend to live longer than their male counterparts, which means they need their savings to stretch farther. “Women tend to think they’ll adjust downward their cost of living expenses,” said Teresa Hassara, head of MassMutual’s workplace solutions, suggesting women don’t think they need as much money in retirement as they do before it. While that is possible, it isn’t always realistic, she added.
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Retirement savings — or lack of it — has become something of a crisis in the U.S.d States. By 2035, nearly 20 million retirees are expected to live in or near poverty, and that number will rise to 25 million by 2050. Millennials, who are in their early 20s to mid-30s, might face their own issues by the time they’re in their 60s and 70s. Many cite financial struggles like student debt, rising home and rental prices and low wages when they’re told to save for retirement (and some don’t think saving for retirement is even realistic for another few years at least).
The hunger for more retirement-readiness help at work comes at a time when one-third of nonunionized American workers don’t have access to a 401(k) plan. States have stepped in to help employees at private companies gain access to a retirement plan. Oregon’s plan has amassed more than $2 million in its program since its pilot last summer and most of the other states have expressed interest in a plan, or are planning to implement one.
Both reports said there’s hope, and it comes in the form of professional help. Employers need to go beyond simply offering a retirement plan. Financial wellness programs at work can help employees set up retirement accounts, figure out how much they can save and calculating ways to reach other money goals as well, the BoA Merrill Lynch report found, which also leads to greater employee satisfaction and higher productivity, the employers told the firm. Workers also want to track their progress, and would be comfortable sharing personal and financial information as part of an employer-offered financial wellness assessment. A majority of retired women (79%) said they are receiving professional financial advice to help them live comfortably in retirement, even if they are not as comfortable with investment risk as their male counterparts.
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Employers can do even more to help, such as addressing other concerns, including student debt, caregiving responsibilities and costs and plans for health care or long-term care in retirement. Both women and men can take advantage of other provisions to boost retirement savings, such as saving an additional $6,000 in 401(k) plans or an additional $1,000 in individual retirement accounts after age 50.
“You have to start thinking and planning for it,” Shao said. “It’s not easy when you have other big financial goals but it is really important. You’ll be older and retired once.”
