Reaching retirement is a bittersweet goal and achievement for many Americans. On the one hand, it represents a well-earned transition to a quieter, more relaxing life after a long career. On the other hand, it represents the loss of some measure of purpose and worth for many. But for a growing number of Americans, retirement is now also looking like a scary cliff that they haven’t adequately prepared for.
Lack of Retirement Preparation
According to data from survey results recently released by Human Interest, many American workers are very unprepared for retirement. Consider these data points:
- Only 2% of respondents could answer correctly what age (59 1/2) someone must be to begin withdrawing from a 401k without a penalty.
- 46% of respondents with an old 401K they cannot access say they no longer have means of contacting their previous employer for help—16% have forgotten their passwords.
- The third most common regret is “not having enough knowledge to make informed decisions,” which is supported by the finding that 91% of employees enroll in their employer-sponsored plan when employers offer education around general financial wellness.
- Almost half (40%) of full-time workers have taken out a loan or withdrawal from their 401(k) accounts; 48% of full-time workers who have taken out a loan have expressed regrets, and 60% of full-time workers who have taken out a withdrawal also shared regrets.
How Employers Can Help
Employers can help mitigate the retirement-related angst their older workers may be experiencing through employer-sponsored retirement programs. These include not just standard offerings like 401(k) matches, but also financial literacy and financial planning instruction that can help workers better understand their financial needs after retirement. Indeed, one of the biggest contributors to angst over retirement planning is simply fear of the unknown.
Employees shouldn’t be left to stress and worry over their retirement planning. That’s harmful to both employee and employer. Older workers who are consumed with fear and uncertainty around their life after work are going to be less engaged and less focused at work, and employers should strive to curb those feelings through support, education, and resources.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.