Money, longevity, and retirement: how you can help employees prepare for what’s ahead
More than 90% of people believe financial resources affect the quality of life in old age.¹ Longer lives are reshaping what retirement means, and as a plan sponsor, you’re right in the middle of that shift. As retirement lasts longer, your participants may need more help with financial planning than just setting a savings goal. Let’s look at the financial challenges that come with longevity and explore practical ways you can support your participants.
Money isn’t the end, it’s the means
Money doesn’t buy happiness directly, but it can enable a comfortable retirement. Your retirement plan can be more than a place to save—it can be a practical tool that helps your employees think through how they’ll use their money over a longer life. It’s not just about the size of their account balance but about what that money will allow them to do, experience, and enjoy in retirement.
Money, according to Dr. Joseph Coughlin, founder and director of the MIT AgeLab, is like electricity. It plays a key role in the choices people can make and the opportunities they can access, from meeting everyday needs to paying for essential services. That’s why financial well-being is so closely tied to overall health and happiness. Let’s explore how money connects and powers important aspects of thriving in retirement.
How money affects multiple aspects of longevity
Partnering with the MIT AgeLab, we explored how financially prepared people are for later in life. The research found that more than 70% of Americans say finances are very or extremely important for well-being as they age, yet only 18% have really started preparing.1 We also discovered the many ways personal finances can affect an individual’s longevity and quality of life.
Financial constraints can affect health
Health and wealth are connected. Stress, including financial stress, can cause health issues. And when people can’t afford healthcare, the MIT AgeLab found many are delaying or skipping treatment, which can reduce their long-term quality of life.
- 20.9% have skipped or delayed needed healthcare due to cost1
- 11.7% reduced or skipped prescriptions because of cost1
Tip: By helping participants understand how to budget, you can help them better prioritize their spending. Your plan’s financial professional or retirement plan provider can help you with budgeting webinars and tools.
Limited finances can restrict social connections
Money plays a role in staying socially active—an important part of well-being in later life. When finances are tight, people may pull back from activities that support connection and fulfillment.
- 36% are at least somewhat worried about having enough money to participate in group activities and see friends1
Tip: See if your financial professional or retirement plan provider offers webinars or content to help preretirees prepare for the social aspects of retirement.
Financial literacy is low
Many people don’t fully understand basic investment concepts, such as diversification, interest, and inflation. This makes it harder for them to make confident decisions about saving, investing, and eventually drawing down assets.
- The average financial literacy score was 55.6%, highlighting a need for better financial education1
Tip: Helping your participants improve their financial literacy can help them take control of their finances and also reduce their stress. Ask your plan’s financial professional and retirement plan provider how they can help with webinars, tools, and engagement.
Four ways to help your participants prepare for longevity
You can play a critical role in helping employees feel more confident and financially prepared for a longer retirement. Through thoughtful plan design, clear communication, and easier access to guidance, you can help them move from awareness to action.
1 Design your plan so that taking the next step is easy
Your plan already has powerful tools—use them to reduce inertia. Features such as automatic enrollment, auto escalation, and strong defaults help participants get started and stay on track. You can go further with simple nudges, such as personalized projections and timely reminders, that show what to do next and why it matters—and your retirement plan provider should be able to help.
2 Make advice more accessible—and meaningful
When your plan’s financial professional is meeting with participants, make sure they’re helping them prepare for all aspects of longevity. That includes more than investments, adding topics such as healthcare, social connections, housing choices, and lifestyle.
3 Build confidence to make better financial decisions
Many participants struggle with basic financial concepts, so providing clear, accessible education and tools is just as important as helping them accumulate assets. Your plan provider and financial professional can create a hub for education and tools that help employees connect today’s decisions with the financial realities of a much longer retirement.
4 Support holistic longevity planning
Retirement may last decades, and it takes ongoing planning. Encourage participants to think about all the dimensions of aging well and understand the real-life costs in retirement—such as housing, care, and transportation—and how they connect to their financial plan. Simple resources, such as a longevity preparedness tool,2 can make this more tangible and motivate people to take action.
You can help participants use their money to thrive in a longer retirement
The message is clear—money is essential, but it’s only powerful when it supports a bigger picture of how people want to live as they age. By making it easier to act, access advice, and connect finances to real-life needs, you can help participants make more confident decisions. The result is a retirement plan that doesn’t just build balances, but helps people use their money to support healthier, more fulfilling lives.
FAQs
What are the financial barriers to healthy aging?
Several financial challenges can make healthy aging more difficult. Rising healthcare costs may cause some individuals to delay medical care or skip prescriptions, while limited finances can restrict opportunities for social engagement and connection. Low financial literacy can also make it harder to make informed decisions about saving, investing, and spending in retirement. Together, these barriers can affect both quality of life and long-term well-being.
What role does financial stress play in health outcomes during retirement?
Financial stress can have a significant impact on health and well-being in retirement. Financial pressures may lead individuals to delay healthcare or reduce prescription use because of cost concerns. Over time, these decisions can negatively affect long-term health and quality of life. Helping participants build financial confidence and manage expenses effectively may reduce stress and support healthier aging outcomes.
How can employers help employees prepare financially for longevity?
Employers can play an important role by designing plans that make saving easier through features such as automatic enrollment, auto escalation, and strong defaults. They can also expand access to financial guidance that addresses more than investments, including healthcare, housing, social connections, and lifestyle planning. Providing clear education, practical tools, personalized projections, and ongoing communication can help employees better understand the realities of a longer retirement and take action with greater confidence.
What tools can help participants with longevity planning?
A combination of education, planning tools, and personalized guidance can help participants prepare for a longer retirement. Effective resources may include retirement income projections, budgeting tools, financial wellness webinars, financial literacy programs, and personalized reminders that encourage action. Employers can also provide access to educational hubs that connect today’s financial decisions with future retirement needs. Longevity-focused tools that help participants assess preparedness for aging-related costs—such as healthcare, housing, and transportation—can make planning more tangible and help motivate better long-term decisions.
How can we make a longer retirement better?
Longevity is about balancing health and wealth to help make those extra years better. The implications are shifting the way we think about retirement.
Important disclosures
Important disclosures
This content is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made.
INTENDED FOR PLAN SPONSORS.
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