American employees go into denial when it comes to retirement. According to the State of United States Employee Retirement Readiness 2015, a report by EI Segundo, California, financial literacy consulting firm Financial Finesse, less than one in five American employees are certain they’re on verge of retirement. And more than three-quarters among the rest have never went through a retirement calculator about their requirements, and only 47% have gone through a risk tolerance assessment to find out how they need to make investments for retirement.
According to recent research studies, the retirement outlook is somewhat better this year, though the majority of employees age 60 or above still plan to delay their retirement. The studies also confirm that the vast majority of Americans are financially unstable resulting in retirement readiness crisis. Approximately 66% employees have access to employer-sponsored retirement plan but still there’s need a doing more, states Bill Charyk, president of the Institutional Retirement Income Council (IRIC).
Bill further adds that if senior employees don’t retire due to lack of retirement savings, there’s a risk of losing younger talent because the positions are blocked by individuals who putting off retirement.
The reasons for putting off retirement includes the following, as per survey:
- 79% cannot retire due to financial crisis;
- 61% require health/insurance benefits;
- 49% does not want to leave as they like working;
- 46% like their workplace;
- 27% fear retirement may be boring.
According to participation in PwC 2015 Employee Financial Wellness Survey, major concern for 40% employees is not being able to retire when they want to as financial pressures are distracting. In such situation, employer can play a major role beyond offering a 401(k) plan and matching contribution, by adapting these strategies for employee wellness.
- Explaining about retirement planning early, so they get enough time to plan.
- If they haven’t begun to save for retirement until later in their careers, they become fearful and fall into despair, so defusing the fear is really required.
- Deliver a list of resources to help with their financial needs.
- Arranging informational seminars on financial security and wellness.
Along with employers, government can pass regulations that encourage employers to adopt these solutions and improve employees’ confidence in Healthcare, financial planning and Social Security by addressing their financial challenges and employee wellness. There’s no one-size-fits-all solution to this looming retirement readiness crisis, it will take a concerted effort from employee, employers and the government to overcome it.