With costs on the rise, employees often consider their finances and how to best set themselves up for a stress-free and comfortable retirement. In order to increase financial well-being, employers should be aware of the top reasons that prevent retirement or effectively save for retirement. Employees could feel unprepared because they are:
- Cashing out a 401(k) prematurely – when the job market is thriving, job switching occurs. A report through the University of British Columbia found that of the 162,360 U.S. employees who left their jobs, around 42% prematurely cashed out their 401(k) accounts before starting a new job. Choosing to cash out early can be detrimental for retirement savings.
- Losing money due to caregiving – when an employee has caregiving responsibilities, it can take longer to retire. Having to care for another person can be costly, forcing the employee to reduce work hours or quit altogether, which reduces or eliminates income. Many caregiving employees struggle to save for their own future when a significant portion of their resources are used to support the individual under their care.
- Battling student loans – not only do recent college graduates struggle with student loans, but also many employees well into their careers. In 2022, 9 million borrowers had between $20,000-$40,000 of student loan debt. Employees with sizable student loans feel unable to consider saving money for retirement when forced to pay monthly amounts to reduce their debt.
- Lacking financial education at work – while some employers prioritize educating their workers on finances and providing resources, that is not the case for everyone. Employers should determine financial stressors for the majority of their workers and offer resources to increase overall financial wellness.
Saving for the future is important for all employees, whether they are at the beginning or end of their career.