Today’s workers plan to live a long, healthy life–many expecting to live to 100 or older. With a longer life, more than half of workers wish to stay employed beyond age 65. And, while 73% of workers have a favorable view of aging, they lack confidence in their ability to achieve financial security and face competing priorities that make it difficult to save.
These are just a few of the findings from Stepping Into the Future: Employers, Workers, and the Multigenerational Workforce, a 119-page report by the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies. The findings result from a survey conducted with more than 1,800 US companies and more than 5,700 workers at for-profit companies in late 2022.
Longevity, Savings and Retirement
According to the report, the median age workers expect to live to is 88, but 13% expect to live to 100 or older. And 52% of workers plan to work beyond age 65 or do not intend to retire at all. That’s a positive outlook given that workplace ageism remains rampant and most people are overlooked by the time they are 50–even earlier in industries like advertising and technology.
“Many workers have unclear and perhaps unrealistic expectations,” according to Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and Transamerica Center for Retirement. “Workers’ uneasiness is illustrated by their retirement fears such as outliving their savings and concerns about Social Security, but relatively few are engaging in planning-related activities which could potentially help them achieve better outcomes.”
For both employers and workers, longevity has implications across all ages. Not only will employers need to demonstrate willingness to be increasingly age inclusive by consistently hiring, training and promoting older workers, but they will also need to create and foster a work environment that makes ageism just as intolerant as any other ism.
Workers need to tackle the financial challenges of saving enough to support a long, comfortable life. Only 23% of workers surveyed felt very confident they would be able to retire comfortably.
According to the new report, most workers reveal competing financial priorities that make it difficult for them, including the need to pay off debt and build emergency savings. Still, workers prioritize retirement savings even though most admit they don’t know anything about retirement investing or need to learn more.
The median amount workers believe they need to save and feel financially secure before leaving the workplace is $500,000. Almost four in 10 workers (39%) estimate they will need more than $1,000,000.
Yet, those surveyed (median age of 40) had an estimated median total household retirement savings of $65,000. Further challenging is the retirement savings gap when savings were compared to company size. Workers of small companies reported a median retirement savings of $36,000, compared with $69,000 among workers of medium companies and $115,000 for large companies.
A whopping 76% percent of workers are saving for health care expenses. The most frequently cited means for health care savings include individual accounts through banks or brokerages, followed by a health or flexible savings account.
Fifty-seven percent of workers are saving for retirement–with nearly two-thirds of them saving outside of work with IRAs, mutual funds and bank accounts. Seventy-two percent of workers have a financial strategy for retirement, including 29% who have a written plan.
Forty-two percent cite building emergency savings as a financial priority and almost six in 10 workers are paying off one or more types of debt, including credit cards, mortgages, other consumer debts as well as student loans. Emergency savings could also prevent workers from dipping into retirement accounts to cover such unexpected expenses. However, workers have saved only $5,000 (median) in emergency savings as of late 2022 and approximately one in six workers (16%) have no emergency savings at all.
Thirty-two percent of all workers indicate they can only cover basic living expenses.
“Many are financially spread thin as evidenced by their other financial priorities, including paying off debt and building emergency savings,” Collinson said.
The report offers a deep dive into employer and employee concerns and perspectives on flexible work arrangements, health and welfare benefits, workplace wellness programs and retirement benefits. It also includes best practices for employers hoping to attract and retain an all-aged workforce as well as recommended action steps for workers who want to continue working in an uncertain economy.
“The good news is there’s intensifying focus on these issues by policy makers, media and news agencies, non-profits, and employers. Widespread awareness driving action at all levels, for example, efforts to expand retirement coverage so that all workers have the opportunity to save in the workplace. The recently enacted SECURE 2.0 creates more ways to promote savings,” Collinson added.
“However, we collectively need to get the word out so that employers and workers are aware and take advantage of what’s available. And we must recognize that our work on a broader societal level is far from done.”