You may have noticed that your older employees seem especially tense of late. When the pandemic hit, it caused the stock market to crash, which in turn caused many folks’ retirement accounts to take a real nose dive. While this is a mere annoyance for your younger workers who have ample time to allow for the market to rebound and to adjust their retirement contributions to make up for the loss, your older workers aren’t necessarily afforded that luxury and may just be reassessing their timeline for retirement. In fact, a survey by Transamerica performed in 2018 (way before the COVID-19 crisis occurred) found that nearly 70% of those born in the baby boomer generation -expected to work past the “traditional retirement age” of 65, or not stop working at all. Further, a Bank Rate survey found that more than half of older adults nearing retirement lose money over their current financial status.
Recent economic reasons aside, your older workers face several other unique generational differences that may be derailing their retirement plans. Read on to learn more and how you as a business owner can help address some of these concerns.
According to a survey by Clever, the average baby boomer has saved only about a third of the recommended retirement goal, with a paltry $136,779 in current retirement savings. Further, the Transamerica survey revealed that 22% have taken a loan out against their retirement, largely to meet other financial priorities. Asked why they haven’t upped their contributions to account for this shortfall, a whopping 20% of workers cited declining income, 15% said they were focusing on other financial priorities, and 10% said they couldn’t because they were struggling to stay on top of household expenses.
As we touched on above, many boomers reported that they have other financial priorities besides investing in their retirement accounts. In a survey by The Ascent, nearly two-thirds indicated that they were paying off credit card debt, with a whopping 39.3% reporting that they had maxed out their credit limit.
While we typically think of boomers as having children that are up and out on their own, or even parents themselves, data from Bankrate suggests that half of older adults have put their own financial hopes and dreams on hold to financially assist their own offspring. Further, more than one-third report that their adult children live with them, according to the Nationwide Retirement Institute.
In addition to supporting their adult children, many members of the baby boomer generation are also navigating the costly prospect of supporting their aging relatives. According to the Transamerica survey, 28% of boomers are of have been caregivers, and the Nationwide Retirement Institute notes that nearly two-thirds pay out of their own pocket for care. Among those surveyed, 21% expressed fear that their contribution to their elderly relatives’ care, which averages $4,012 per year, will derail their retirement plans.
An additional source of stress for baby boomers lies in their failure to stow away emergency funds. In fact, the Clever survey suggests that one-third of boomers don’t have an emergency fund, which is generally recommended to include six-months’ worth of expenses. Further, a survey by Northwestern Mutual finds that one in five boomers have less than $5,000 in personal savings, with more than half relying on credit cards to bail them out should disaster strike. Care costs:
Asked what their biggest concern was heading into retirement, more than one-third of boomers cited healthcare costs. In fact, the survey by Bank Rate finds that the boomer generation spends 41% or more of their average Social Security income on health care costs, a figure that is expected to rise to about 50% within the next decade due to rapid inflation in the sector.
So how can you help?
According to the pros, more than 60% of baby boomers say that they don’t know as much as they should about retirement savings and 55% would appreciate education and/or advice on how they can best prepare for retirement. According to a report by the TIAA Institute, “greater financial literacy is positively associated with the capacity to handle a financial shock, saving for retirement on a regular basis, being unconstrained by debt and other indicators of financial well-being.” Therefore, as an employer, the best way you can help is to offer financial wellness programming to your employees. These programs seek to help employees improve their financial literacy, learn how to better manage their money, pay off debt, build their savings, and ultimately better prepare for retirement. In giving these employees the tools they need to achieve better financial wellness, the pros note that you can expect a happier, healthier, less frazzled and more productive workforce that gets to retire when the time is right for them and your company, as opposed to clinging on for the paycheck even when they’re far past their prime.