With most U.S. employees financially stressed and worried about inflation, the ability to retire is now a top concern of employees, the results of a new study reveal.
In fact, the ability to retire is now the #2 concern of employees this year, behind only covering monthly
expenses, according to Mercer’s 2022 Inside Employees’ Minds. This is a substantial jump from last year, when it claimed the #5 spot. Meanwhile, covering monthly expenses jumped to the top spot from #9 in 2021.
Mercer also found that age 45-54 is an inflection point in planning for retirement, as concerns increase while confidence decreases. For instance, only 40% of those aged 45-54 are confident in their ability to retire and it ranks as the #2 concern for this age group among the list of overall concerns. In contrast, 54% of those aged 35-44 express confidence in their ability to retire and it ranks as the #7 concern for this age group.
Additionally, fewer than half of respondents (46%) feel confident they can turn their retirement savings into a consistent stream of income to last the rest of their life—and that confidence drops to roughly 1 in 4 (27%) for low-income workers.
When asked what changes they would value most in the retirement space, employees overall chose an increase in the contribution amount matched by their employer. But employees under 45 also asked for employers to match payments made to student loan debt and contributions to a health savings account (HSA).
Mercer observes that younger employees may not have the disposable income to contribute to retirement savings, and by matching retirement contributions for expenses that are often a significant portion of income, like student loans and healthcare costs, employers can help them build their nest egg early—reducing stress and increasing retirement confidence for the future.
Financial Health and the ‘Great Resignation’
The firm explains that the purpose of the survey was to understand the root causes of high turnover and how employees’ needs and wants have shifted over the past year since the term “Great Resignation” was coined in May 2021.
Not surprisingly, this year’s study shows the pressing importance of employees’ financial, emotional and physical well-being. Above all, Mercer found that financial concerns of employees reign supreme this year, despite U.S. employers increasing base pay between 5% and 7% in 2022.
Three out of four employees (75%) say the high inflation and market volatility this year has significantly increased their financial stress. These concerns remain high even for high-income earners — as 71% of employees who make more than $200,000 per year say that high inflation and market volatility have increased their financial stress. Overall, nearly two-thirds of employees (62%) say they have reduced spending, and a third say they’ve reduced savings or tapped into savings to supplement their spending needs.
The study also found that, after two years of crises — the pandemic, the war in Ukraine and historic inflation — employees are more focused on their financial security and well-being than climbing the ladder or career advancement.
Consequently, the number of employees who are considering leaving their employer has increased to 36% compared to 28% in 2021, with low-income (those who make less than $60,000 per year), frontline (healthcare, retail, hospitality, etc.), and underrepresented employees being more likely to consider leaving than other groups.
Behind pay and workload, insufficient healthcare benefits is the next top reason they would consider leaving their employer. According to the findings, 68% of employees report challenges with getting the care they need, with the top challenge being trouble affording the healthcare costs that are not covered by health insurance plans.
“It’s clear now more than ever that employees are prioritizing their well-being now. The top three reasons employees consider leaving their employer are pay and benefits, burnout due to workload, and insufficient healthcare benefits,” explains Adam Pressman, Mercer’s U.S. Employee Research Leader. “For some, especially front-line and low-income employees, that means financial survival. Others, who have their basic financial needs met, are placing increased importance on their lives outside of work.”
Mercer’s survey was conducted between Aug. 26 and Sept. 9, 2022, among 4,049 full-time employees in the U.S., working for organizations with more than 250 employees.
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