The economy is taking a toll on participants
Just as we were coming out of the pandemic, new challenges surfaced—soaring inflation and rising interest rates. These conditions have made it harder for many participants to balance their current financial needs with other financial goals, such as saving for retirement, leading to tough decisions about both.
- 76% are being more deliberate with their purchases, with 28% buying only essentials
- 19% have had to dip into their savings to pay for daily life
- 56% have fallen behind on saving for retirement—up from 43% in 2021
- 38% now expect to retire later than planned, and this number is even higher for people with major debt (63%) and those feeling stressed (50%)
But not everyone is struggling
While these findings are disheartening, the news isn’t all bleak. Our report shows a clear connection between participants’ actions, their financial situation, and their level of stress. And the support that employers and financial professionals provide can play a vital role, which is evident when we look at these three drivers of financial health.
1 One-on-one advice
For many people, their 401(k) plan is their only exposure to the financial markets, so their investment knowledge and experience may be limited and, as a result, having to choose their own investments can be stressful. However, the majority of participants recognize the value of seeking professional advice. Eighty-seven percent say meeting with a financial professional would help them do more to prepare financially for retirement. And perhaps more importantly, those who do work with a financial professional are 3x more likely to say their retirement savings is ahead of schedule.
2 Financial wellness programs
While most people understand the importance of saving for retirement, many are finding it hard to put money away as they struggle to pay their bills or face mounting debt. Participants want help getting their finances under control, and they’re looking to their employers for this assistance. Seventy-eight percent say it’s important for employers to offer financial wellness programs, and a growing number say these resources help reduce financial stress.
If you’ve been hesitant to add a financial wellness program, it may be time to reconsider as these resources can help build loyalty and increase productivity. Many retirement plan providers offer financial wellness tools and resources that you can use to help you meet this need.
3 Digital interactions
Although motivating participants may feel like a constant challenge, our survey results show that a personalized and well-executed engagement program can help. In fact, we found that participants who logged in to their retirement account in 2022 and opened six or more emails feel better about their finances and retirement readiness and had a 20% higher average contribution rate—9.4% versus 7.8%.
So for optimal engagement, consider including both frequent emails and personalized tips that participants can act on right away when creating your participant communication strategy. Additionally, people are generally the most engaged during the first three months after they join their plan, so try to take advantage of this critical window to help them get off to a good start.
There’s still more work to do
All of us who work in the retirement plan industry struggle with how to get workers not just saving but saving enough for the retirement they want. And although we saw some improvements in personal finances during the pandemic, this progress was eroded by recent economic challenges. That said, we were thrilled to see the positive impact that advice, financial wellness programs, and engagement can have on workers’ finances and their related stress. Now’s the time to reach out and help participants navigate this economy to keep their financial lives moving forward. It’s support that works.
You’ll find more insight in our 2023 stress, finances, and well-being report to help you drive behaviors that matter.
John Hancock’s ninth annual stress, finances, and well-being survey, John Hancock, Edelman Public Relations Worldwide Canada Inc. (Edelman), December 2022. This information is general in nature and is not intended to constitute legal or investment advice. Edelman and John Hancock are not affiliated, and neither is responsible for the liabilities of the other. This report presents the results of research conducted by Edelman on behalf of John Hancock. The objectives of this study were to (1) quantify the financial situation and level of financial stress of John Hancock plan participants; (2) determine the key triggers of financial stress; (3) understand the extent to which actions, including actual financial behavior and planning activity, ameliorate stress; and (4) assess retirement preparation and readiness. This was an online survey of 3,825 John Hancock plan participants. The survey was conducted from 11/29/22 through 12/14/22, with an average survey length of approximately 18 minutes per respondent. Respondents were located from a list of eligible plan participants provided by John Hancock. All statistical testing is done at 0.95 significance levels. The maximum margin of sampling error at the 95% confidence level is ±1.3%. Percentages in the tables and charts may not total to 100 due to rounding and/or missing categories.
The content of this document 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 (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.