Workers are delaying retirement because of inflation, which
is affecting employers’ ability to hire new workers and promote personnel,
according to a new report from Nationwide Retirement Institute.
The 2022 Nationwide In-Plan Lifetime Income Survey found
that 40% of workers age 45 and older are delaying their retirement because of
rising living costs—double those who said they delayed retirement last year
because of the COVID-19 pandemic.
“We’re watching delayed retirements impact employers’ entire
talent lifecycle, and it may be unintentionally contributing to ‘quiet
quitting,’” Amelia Dunlap, vice president of Nationwide Retirement Solutions
marketing, said in a press release.
Nationwide Institute data show that 36% of private-sector
employers say workers’ delayed retirements have affected their ability to hire
new talent. In addition, 34% said delayed retirements have affected promoting
young workers and 35% said they have made their health benefits plans more
expensive. Nationwide also found that employers are reporting effects to the
well-being of their employees because of delayed retirements.
Data show that among employers, 30% reported lower team
morale, 29% reported negative effects on employees’ mental health, 27% have
noticed lower workforce productivity and 22% reported negative effects on the
physical health of employees.
“Employers may find themselves with a workforce that lacks
motivation to go above and beyond without the ability to reward employees for a
job well done,” Dunlap added. “Employers should look for opportunities to
better support their older workforce as they near retirement.”
The study also found that 24% of all workers feel they are
on the wrong track for retirement, an increase of 10 percentage points compared
to 2021, while 58% of workers have a positive outlook on their retirement plan
and financial investments, compared with 72% one year ago.
Additionally, the Nationwide Retirement Institute found that
66% of employees cited inflation as a top retirement concern, versus 53% in
2021.
An analysis across the public and private sectors shows that
government employees are more optimistic than private-sector employees are
about their retirement security: 28% of government employees are expecting to
delay their retirement because of inflation, compared with 41% of
private-sector workers, according to Nationwide data.
Accordingly, 75% of government workers said they are on the
right track with regard to preparing financially for retirement, versus 56% of
private-sector employees.
“Employers must invest now in solutions and benefits that
help their employees enhance their financial security and give them greater
confidence that they can retire ‘on time,’” Dunlap said. “The private sector
has an opportunity to invest in solutions that are already enjoyed by the
public sector, such as in-plan guaranteed lifetime income solutions. Like
pensions, they offer a steady stream of predictable income for life.”
The Nationwide report does show growing interest from
workers in lifetime income investment options.
According to the data, 53% of all employees age 45 and older
are interested in guaranteed lifetime income investment options included as
part of a target-date fund, compared with 42% in 2021; 48% reported they are
interested in contributing to such investment options as part of a managed
account; and 41% would likely roll over retirement savings into a guaranteed
lifetime income investment option if they had the option—a six-point increase
from last year.
“Our research shows that employers and employees alike are
starting to realize that guaranteed lifetime income offers unique confidence
that workers are protected against inflation and market volatility and that
individuals won’t outlive their savings,” Dunlap said. “Employers should work
with their retirement plan adviser or consultant to help find the right
investment solutions to set up their workforce for long-term financial success
and the growth of the next generation of talent.”
The report was conducted by Edelman Data and Intelligence in
an online survey on behalf of Nationwide from July 14 to August 5. The
respondents included 500 corporate plan sponsors, 100 public-sector plan
sponsors, 1,000 plan participants age 45 and above with access to a 401(k),
403(b), 457(b) or other tax-preferred defined contribution plan at work and 100
plan participants age 35 to 44 with access to a 401(k), 403(b), 457(b) or other
preferred defined contribution plan at work.
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