A new report by MassMutual raises questions about the current effectiveness of retirement savings initiatives and programs in the United States, as the overwhelming majority of respondents, roughly 72 percent, agreed that they are not saving enough for retirement. This is alarming, but not all that surprising. Many Americans struggle to meet their current expenses and needs, let alone save for the future. Perhaps more troubling, was the finding that women were three times more likely than men to report that they could not afford to save for retirement. This feeling of unpreparedness for retirement also appears to be impacting women in other areas outside of retirement savings. In fact, women were more likely than men to report that their financial concerns were causing them added stress, limiting their social activities, affecting the quality of their familys medical care, and negatively impacting their relationships.
Women were more worried about the financial health of their families than men, more worried about the current political atmosphere than men, and felt less prepared for retirement than their male counterparts. This adds up to increased stress. The report also asked men and women about the types of employer-sponsored programs that would interest them and would help them feel more financially secure. While both men and women reported that they were interested in more financial planning services from their employer, women were more likely than men to want those services. However, a bit shocking was that more men than women wanted Social Security counseling. This was surprising because other surveys have shown that women are much more concerned about reductions or changes to the Social Security system. For instance, The American College of Financial Services 2017 Retirement Income Literacy Report indicated that 52 percent of retirement-aged women were concerned a bout cuts to Social Security, but only 33 percent of men were equally concerned. However, women also demonstrated lower levels of Social Security planning and retirement planning literacy in the same report, which could explain some of their heightened levels of concern. Higher levels of financial literacy were related to lower levels of concern about finances.
The MassMutual report also indicates that many male and female employees want more employer-provided financial education programs in general, covering a wide range of topics. While general financial planning services and Social Security counseling topped the list of most-desired programs, there was significant interest in budgeting, tuition reimbursement, debt counseling, and college loan repayment programs offered by an employer. This clearly demonstrates that simply offering a 401(k) or qualified retirement plan is hardly sufficient to put an employee on track for financial security. Instead, what employees need is more comprehensive financial education and assistance programs provided by employers.
The desire for more education makes sense, as Americans have shown poor retirement and financial literacy rates, with only 25 percent passing the aforementioned American College retirement literacy quiz earlier this year. Higher levels of financial literacy are related to better and more comprehensive financial planning, which ultimately leads to less stressed and happier employees. Employers should consider adding more financial educational programs as a benefit to employees, but they need to fully commit to the charge. Just adding a few seminars without real support will likely falter and provide little to no benefit to the employees or the company. Instead, companies must internalize this challenge and commit time and resources to improving the financial well-being of their employees. In the long run, this approach also benefits the employer with a workforce who experience less financial stress and can devote more focus to the job.
Additionally, employers should ask their employees what they want. A company with a large number of women employees may indicate a preference for different set of educational programs than a firm with a predominantly male workforce. Age, income, and other factors could also impact employee demands concerning desired programs, and should be considered. While few employers have the resources to provide the full spectrum of possible benefits to employees, it is clear that most employers could consider adding some of the programs that their employees most need and desire. A more robust choice of employer-sponsored educational programs and employer-sponsored savings vehicles could make a considerable impact on reducing financial stress about retirement savings for both women and men.