While today’s employees feel confident in their finances, the reality of their situations is not aligned with this confidence, a new report shows.
According to MetLife’s 17th annual U.S. Employee Benefit Trends Study, nearly two out of three people say they are confident in their finances, but half say they are living paycheck to paycheck, many have tapped their retirement savings, and an increasingly large group says they will have to delay their retirement because of their finances. In fact, the level of respondents who say they expect to postpone retirement due to their financial situation has actually gone up over the last four years, from 37% in 2015 to 52% in 2019.
This is especially true for Generation X, which is the most likely generation to say they will never retire and may remain in the workforce for the next 30 or more years. Nearly one in five (18%) Gen X employees do not plan to retire at all, compared with 14% of Millennials and 12% of Boomers. One reason, according to MetLife, could be that more Gen X workers (55%) are further behind on their retirement savings than Millennials (49%).
To that end, three of employees’ top five financial concerns relate directly to retirement, even among those who are relatively confident in their finances:
- Being able to afford the cost of health care in retirement (72%)
- Outliving my retirement savings (68%)
- Having money to pay bills if someone loses their job (67%)
- Having money to cover out-of-pocket medical costs (67%)
- Ability to rely on Social Security/Medicare in retirement (66%)
And as employees’ personal and work lives become increasingly intertwined, they are expecting more support from their employers for their overall well-being – both inside and outside of work. As such, the level of employees looking to their employers for this assistance has gone up:
- 53% of employees say employers have a responsibility for their financial well-being, up 3% from last year; and
- 54% of employees say employers have a responsibility to help them save for retirement, up 2% from last year.
Yet as employees’ expectations of their employers increase, perceptions of their benefits are not keeping up. According to the findings, 67% of employees are satisfied with the benefits they receive through their employer – down 4% from last year – while 73%of employers believe their employees are satisfied with the benefits they offer.
To address this, MetLife suggests that employers should start by looking at their benefits offerings. When asked to decide between better benefits or more flexibility, 57% of Gen X workers chose better benefits, compared to 48% of Millennials. The study notes that better benefits is the third-highest request on employees’ lists – behind salary and a positive work environment – of what they need to successfully navigate their work/life worlds.
“The most important benefits to employees have two things in common: (1) they play a central role in helping them achieve their personal and work-related goals; and (2) they address their main stressors, particularly around personal finances, retirement, and their family’s health – which overlap considerably,” the study explains.
Employers apparently are taking note. According to the findings, 57% of employers – up 7% this year – are committed to offering their employees a wider range of non-medical supplemental benefits. In addition, they are also exploring retirement programs with options that help employees manage their money after retirement – so that retirees don’t spend their money too quickly and outlive their savings.
And because employees’ needs differ, the ability to choose offerings and customize a holistic benefits package is increasingly important, the study explains. In fact, 93% of employees say that the ability to customize their benefits is a “must-have or nice-to-have option.” Employers, however, may be underestimating the extent to which employees are looking for benefits that suit their unique situations, with only 68% seeing this as important to their employees.
“The study shows there are significant gaps between employee expectations and employers’ priorities, especially among Gen X, who will continue to be a core segment of our workforce for decades to come,” notes Todd Katz, executive vice president, Group Benefits at MetLife. “By building workplaces that address all employees’ needs, employers can build a more loyal and productive workforce.”
Conducted in October 2018, the report consists of two studies fielded by Engine Insights: an employer survey comprising 2,500 interviews with benefits decisionmakers at companies with at least two employees and an employee survey consisting of 2,675 interviews with full-time employees age 21 and over at companies with at least two employees.