Mental health
Workers are still thinking about how to prepare for retirement even as immediate financial pressures are piling up and many are struggling to keep up with the cost of living, according to new research from Dayforce. This is a surprising finding as long-term planning often takes a back seat to more urgent and pressing short-term challenges like how to afford groceries, gas and housing.
Eighty percent of Americans consider retirement insecurity to be a crisis, up from 67% just a few years ago, the survey found. The state of retirement preparedness is complicated by the fact that half of private sector workers have no access to a retirement savings plan through their job, according to Dayforce. In addition, younger employees, particularly Gen Z, are participating at lower rates in employer-sponsored retirement plans than their older peers.
The challenge is not purely financial. Stress around money is one of the biggest drivers of poor mental health, and those who are already struggling financially or mentally are less likely to have access to a retirement plan at work, the report said. Improving long-term financial security can have a major impact on peace of mind, focus and stability. As such, retirement benefits should be considered wellness benefits, said Dayforce.
Increased employer contributions to retirement plans appealed to full-time workers surveyed by Dayforce. Nearly 100% said it would improve their mental health and more than half said it would be extremely helpful.
Employees also valued financial literacy and coaching, with 82% saying training in this area would improve their mental health and wellbeing. The percentage was even higher among Black and Latino workers.
Emergency savings programs that allow employees to avoid tapping into retirement savings or taking on high-interest debt when faced with unexpected expenses, were also appealing, the report found. Ninety-four percent of women indicated an in-plan or sidecar account that allows for emergency savings as part of their employee-provided retirement plan would be helpful to their mental health.
Young workers in particular favored student loan assistance programs that tie matching contributions to retirement accounts with student loan repayments. Eighty-four percent of Gen Z employees said such programs would help their mental health and more than 40% said it would be extremely helpful.
Supporting employee mental health through financial wellbeing initiatives is also good for business, said Dayforce.
“Employees who feel financially secure are more likely to stay with their employer, recommend their workplace to others, and report feeling valued,” said Dayforce. “Among workers under 30, nearly two-thirds said benefits like emergency savings accounts would improve their experience at work or their opinion of their employer. For workers dealing with mental health challenges, 62% said these benefits would improve their work experience.”
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