Nationwide Retirement Institute research finds that 40% of workers are expecting to retire later than planned due to high inflation
Four in 10 older American workers are delaying their retirement due to the rise in living costs – double those who said they delayed their retirement a year ago because of the COVID-19 pandemic. The survey, released today by the Nationwide Retirement Institute, finds wide-ranging workforce consequences because of delayed retirement.
In large numbers, companies are reporting ripple effects on their employees, especially younger workers. More than one-third of private-sector employers (36%) indicate that delayed retirements impact their ability to hire new talent and 34% say it impacts their ability to promote young talent. Roughly the same percentage (35%) say it makes their health and benefits plans more expensive.
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Employers also report that delayed retirements currently impact the wellbeing of their employees:
- Three in 10 employers report lower team morale
- Nearly the same amount (29%) report that it has negatively impacted employees’ mental health
- 27% have noticed lower workforce productivity
- 22% say that it has negatively impacted the physical health of employees
“We’re watching delayed retirements impact employers’ entire talent lifecycle, and it may be unintentionally contributing to ‘quiet quitting,” said Amelia Dunlap, vice president of Nationwide Retirement Solutions marketing. “Employers may find themselves with a workforce that lacks motivation to go above and beyond without the ability to reward employees for a job well done. Employers should look for opportunities to better support their older workforce as they near retirement.”
Employees are losing confidence in their retirement security amid a challenging economic environment. Roughly one in four American workers (24%) feel they are on the wrong track for retirement and fewer than six in 10 employees have a positive outlook on their retirement plan and financial investments – a significant drop from 2021 (58% vs. 72% in 2021). Two in three (66%) employees cite inflation as a top retirement concern (vs. 53% 2021).
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While top financial goals for employees include covering retirement living expenses and having predictable retirement income, younger workers aged 35-44 report in higher numbers than those 45+ that they feel confused (21%) or panicked (16%) about their retirement plans and financial investments.
When analyzed across the public and private sectors, the study reveals that government employees are much more optimistic than private sector employees about their retirement security. Only 28% of government employees are expecting to delay their retirement because of inflation vs. 41% in the private sector. Three-fourths (75%) of government employees say they are on the right track when it comes to being financially prepared for retirement vs. 56% of those in the private sector.
“Employers must invest now in solutions and benefits that help their employees enhance their financial security and give them greater confidence that they can retire ‘on time’,” added Dunlap. “The private sector has an opportunity to invest in solutions that are already enjoyed by the public sector, such as in-plan guaranteed lifetime income solutions. Like pensions, they offer a steady stream of predictable income for life.”
The study finds that more than half of employees are interested in guaranteed lifetime income investment options included as part of a target-date fund, an 11-point increase since 2021 (53% vs. 42% 2021). Nearly half (48%) report they are interested in contributing to these investment options as part of a managed account. More than four in 10 employees (41%) would likely roll over retirement savings into a guaranteed lifetime income investment option if they were able to – a 6-point increase since 2021.
Similarly, most employers report high levels of favorability (75% private sector and 86% government), interest (69% private sector and 70% government), and comfort (64% private sector and 73% government) with the addition of guaranteed lifetime income investment options within employer-sponsored retirement plans.
However, a lack of access and familiarity is holding back employees from contributing to these investment options. Only about a fifth (21%) of employees are familiar with guaranteed lifetime income investment options. When asked about barriers to not contributing to one, both employees (42%) and plan sponsors (38% private sector, 32% government) cite a lack of knowledge as the top barrier.
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