Millions of working Americans remain challenged by the cost of living in 2024, with many concerned about the long term impact on their finances.
A report released this week highlights how inflation and interest rates remain a burden on working individuals and families, and how this is weakening their ability to meet their major financial goals including retirement.
The poll of 10,000 workers across multiple industries by WTW found that 88% are struggling to meet basic living costs including 46% who are extremely worried about the situation. Food, healthcare, housing, and transportation are the main concerns.
The share of respondents who said they are living paycheck to paycheck was 44%, up from 37% in 2020, and one third said they were worse off financially than a year ago more than doubled to 33%. Four in ten do not think their finances are on track and 21% expect things to worsen over the next year, adding to the widespread negative impact on wellbeing.
“High inflation combined with the aftermath of a once-in-a-generation pandemic is causing many employees to feel overwhelmed and discouraged about their financial situation, which is affecting overall wellbeing,” said Mark Smrecek, senior director, Retirement, WTW. “Employers should take action to improve financial wellbeing within their organizations by adequately educating employees on their resources to close financial gaps and connecting employees with relevant elements of their total rewards package.”
More than half of respondents over the age of 50 think they will still be working into their 70s and 79% of all workers admit that they are not saving enough for their retirement, with only 52% believing they are on the right track to retirement.
The survey also highlighted a gap between requirements from financial wellbeing provision at their workplace and what is delivered.
Most respondents said they want financial wellbeing support from their employers and almost half want their employers to help them grow their savings and wealth, but other WTW research found only one in four employers ranked financial wellbeing as a top priority for their wellbeing program over the next three years.
“Employer retirement programs, and specifically defined contribution plans such as 401(k)s, remain the primary path for employees to save for retirement,” said Beth Ashmore, managing director, Retirement, WTW. “With challenges meeting their day-to-day expenses while still planning for retirement, employees are looking for help from their employer to build a retirement nest egg, but they also report needing flexibility for emergencies and having a desire to maximize their benefits.”
Ashmore addressed the disconnect in priorities between employees and employers.
“Employers have an opportunity to align their focus with employee value, cost pressures and talent objectives to address how their benefit programs, particularly retirement and financial wellbeing initiatives can help employees juggle their finances today while being on track for retirement.”
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