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Many employees delaying retirement plans; one-quarter have tapped into retirement savings due to the pandemic
ARLINGTON, Va., Dec. 15, 2020 (GLOBE NEWSWIRE) -- One in four full-time U.S. employees say their financial situation has deteriorated as a result of the pandemic, and just as many expect they will have to delay retirement, according to a survey of nearly 5,000 employees by leading global advisory, broking and solutions company Willis Towers Watson.
The 2020 Global Benefits Attitudes Survey found the percentage of employees living paycheck to paycheck during the pandemic has remained steady at 37%, roughly the same as in 2019. Still, one in four respondents (24%) say their finances have worsened over the past six months. Moreover, nearly four in 10 employees (37%) have been unable to pay bills, are carrying over interest charges for a sustained period, or have had to borrow money from family and friends to make ends meet during the pandemic.
“The pandemic is clearly shining a light on the precarious financial state of many employees. While some employees are spending less and saving more, a disturbingly high portion are being forced to tap into retirement savings to get by,” said Shane Bartling, senior director, Retirement, Willis Towers Watson. “Yet the news is not all gloomy, as some employees, including lower-income wage earners, say their finances are improving. Many of these employees, especially those still struggling and living paycheck to paycheck, are ready to spend more after the pandemic is over.”
Indeed, among the 22% of employees who say their financial situation is improving, almost six in 10 (58%) are likely to take an extended vacation after the pandemic ends, while half (50%) have major spending plans. Still, more than two-thirds (69%) plan to be financially prudent, save as much as possible and pay off debt.
One in four workers expect to delay retirement
The pandemic is forcing employees to rethink their retirement plans. One in four employees aged 50 or older (25%) expect to retire later than planned, with more than one third of older employees (35%) planning to retire at age 70 or older. Not surprisingly, financially stressed employees are more likely to delay retirement as a result of the pandemic, with 50% of all employees who are living paycheck to paycheck expecting to delay retirement. Moreover, nearly a third of employees aged 50 or older (31%) admit they will need to save more for their retirement.
The survey also found exactly one-half of older employees (50%) expect to phase into retirement by either working fewer hours, having reduced responsibilities or taking an alternative job. The majority of these workers are interested in phased retirement because they want to keep working, not because of financial need. In fact, only one in 10 employees will phase into retirement solely for money reasons.
Employees also said they want greater long-term financial security — notably through a more generous retirement program. And they are looking to their employers for help with saving for retirement. More than half of respondents (53%) cited saving for retirement as the number one area they want help from their employer. Additionally, 40% say guidance on how to better manage their finances has become more important in the past six months; however, only a third of respondents (36%) say the tools and resources offered by their employers to help manage their finances meet their needs.
“The link between financial stress and employee wellbeing — particularly physical and mental health — is no secret. Many employees who are struggling show significant signs of stress and anxiety. But even those employees who are doing better are more stressed — which highlights the extra hours of work and other burdens created by the pandemic. Yet, the opportunity for employers to play a critical role in helping employees improve their financial wellbeing and retirement readiness remains great. Investing in tools and resources, and educating and encouraging employees to use them, can go a long way toward reducing employee financial stress and boosting healthy outcomes and worker productivity,” said Steve Nyce, senior economist, Willis Towers Watson.
About the survey
The 2020 Global Benefits Attitudes Survey was conducted during the first half of October 2020. Respondents included 4,898 U.S. employees (4,481 full time) from large and midsize private employers, representing a broad range of industries.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
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