A new study suggests that many employers might be misreading employee behavior in today's cooling labor market. Economic pressures — and not necessarily loyalty — could be driving workers to stay put. To that end, employers substantially overestimate worker satisfaction with their benefits programs, a disconnect that could leave organizations vulnerable when economic conditions improve and workers regain confidence to explore other opportunities.
These findings and more are from the annual Benefits and Employee Attitude Tracker (BEAT) Study, conducted by the financial and insurance organization LIMRA. The report, based on responses from 4,052 U.S. employees in January 2026, explores how economic pressures are shaping behavior and decision-making.
Rising medical costs are impacting employee benefit affordability, with more than three-quarters of workers dealing with a rise in medical premiums in 2026; some report increases of more than 10%. What's more, half of workers made changes to their benefit plans as a result — including 16% who reduced spending on other benefits and 12% who reduced retirement savings contributions. The picture was worse for young employees, according to LIMRA, with nearly three-quarters of Gen Z workers taking some form of action when their medical premiums increased. The report also found that Gen Z workers are most likely to reduce benefit spending overall.
"It is concerning that some workers, especially Gen Z, are reducing their 401(k) contributions due to rising medical insurance premiums," said Kimberly Landry, research director at LIMRA. "For a Gen Z worker earning a $50,000 salary and contributing 5% of their salary, reducing that rate by just 1% means saving $500 less each year. Over a 40-year career, that could result in at least $20,000 less in retirement savings before even accounting for employer matches, salary growth, or investment returns. Even small reductions in retirement contributions can have significant long-term effects."
Even as employees look to cut back on benefit spending, LIMRA's research found that most workers have a critical need for the financial protection that benefits provide. A majority of households would have trouble paying living expenses within several months if they lost a breadwinner's income, while only 45% of employees would be able to pay an unexpected medical bill of $2,000. This, LIMRA officials noted, points to a pressing need for disability insurance, life insurance, and supplemental health insurance benefits.
LIMRA also found a stark disconnect between employee satisfaction with benefits and employer perceptions of that satisfaction — with employers dramatically overestimating how well benefits are meeting their workers' needs.
"When employers misjudge the success of their benefits programs, they'll be less motivated to make enhancements," Landry said. "This puts them at risk of losing talent to competitors with more comprehensive offerings."
On a positive note, LIMRA officials said that overall satisfaction with benefits has risen since last year, with 45% of workers now very satisfied with their offerings. This, however, may be tied to the recent trend of "job-hugging" amid a cooling labor market, causing employees to look more favorably upon the benefits they already have rather than searching for greener pastures.
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