Headlines to the contrary, a recent survey found that confidence is growing among American employees concerning their ability to meet their long-term financial and retirement goals.

According to the fourth annual Protected Retirement survey from the Nationwide Retirement Institute, more than 6 in 10 (65%) workers say they are on the right track when it comes to financial preparedness for retirement. This figure rises to 71% for those aged 22-34 years old, which is a 15-point increase from 2023.

This improvement, after months of strong stock market gains, the survey found, is due largely to the active engagement of employees in managing their retirement accounts. Most workers (76%) check their balances at least once a month and 3 in 10 modify their contributions or rebalance their investments monthly.

In addition to growing optimism around their retirement finances, employees increasingly think about their retirement savings in terms of the monthly income it will provide in retirement (59%) rather than a total savings balance (26%).

They are also embracing new solutions to create steady income in retirement. Nearly two in five (37%) employees aged 45 or older are now aware of guaranteed income options within 401(k) plans – which is a substantial 20-percentage point increase since 2023, the survey found.

What’s more, to enhance and maximize their savings, employees are asking for automatic features that simplify retirement planning, reflecting a shift in how people think about retirement savings – from a nest egg to a crucial element of financial security in retirement. Nationwide notes, for example, that 73% want their workplace retirement plan to include an automatic way to convert their assets to a stream of income in retirement, a number that rises to 77% for employees aged 45 and older.

“I’m thrilled to see that retirement plan participants are viewing 401(k) plans as so much more than just a savings vehicle by thinking about them as a comprehensive tool to help prepare for and live in retirement,” stated Cathy Marasco, vice president of Protected Retirement Solutions at Nationwide. “In this new era, it’s crucial that we meet employees where they are with the right education and solutions to help them achieve financial security in retirement.”

Lingering Anxieties 

Yet, despite this increased optimism, 56% of employees continue to worry about outliving their retirement income and many (61%) find it challenging to determine how long their savings need to last.

Not surprisingly, inflation and the cost of living continue to weigh on workers, with 80% of both public and private sector employees expressing significant concern. Because of this, roughly a quarter of employees aged 45 or older (28%) say they now expect to delay retirement.

As such, Nationwide suggests that these anxieties reveal gaps in retirement planning that need to be addressed by employers, employees and financial professionals.

Employers have a critical role to play in offering employees not only resources and information about retirement planning, but also simple, automated guaranteed income solutions, the firm notes. Failing to meet these needs can lead to more delayed retirements, negatively affecting the organization’s financial performance and the onboarding of new talent.

For instance, according to the findings, nearly half (47%) of private sector employers say that delayed retirement makes their health and benefits plans more expensive, 35% say delayed retirement impacts their ability to promote younger talent, and 26% have noticed lower productivity levels.

Financial professionals also play a crucial role in educating employers and making sure that plan participants have access to retirement planning tools. To that end, the findings show that most employers are interested in including guaranteed income options in target date funds (85% of private and 91% of public employers) or managed accounts (81% of private and 87% of public employers), representing an opportunity for financial professionals.

“While education is helpful, survey respondents told us they want solutions that make it easy. We’ve found that automatically enrolling participants and automatically increasing contributions lead to significantly better outcomes for participants,” Marasco further emphasized. “The next opportunity is to enable automatic income in retirement with protected retirement solutions – and that’s not just a nice-to-have. It’s a necessity to help ensure that participants can retire with confidence and security.”

Edelman Data and Intelligence (DXI) conducted the survey among 500 private plan sponsors, 100 public plan sponsors, 2,200 plan participants, 400 peak retirement plan participants, and 400 financial advisors on behalf of Nationwide from July 11–26, 2024.

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