For people working today, the challenge of saving for retirement differs by generation.
Gen Zs and millennials have been dealing with paying down immediate debts and credit card balances, Lorna Sabbia, head of workplace benefits at Bank of America (BAC), told Yahoo Finance. “So sometimes that is the priority versus long-term planning. And so to balance those two things (is) a little bit more difficult.”
Gen X, Sabbia said, seems to feel the weight of impending retirement heavily, reporting a marked drop in their overall feeling of financial wellness in recent years.
And there’s one burden weighing on workers of every age: caregiving.
About 50% of employees are caregivers — and they don’t want to tell anybody about it.
‘It’s not like they’re walking around their workplaces with a t-shirt that says ‘I’m a caregiver,’ Sabbia said. “But in reality, they’re dealing with those additional expenses. So it’s more of a struggle. On average, we find folks actually spend $7,000 a year out of pocket.”
That can be small expenses, like buying meals for a relative recovering from surgery, but added together they take available money away from retirement savings.
There’s a disconnect between working caregivers and employers. While most employers say they offer support to caregivers, 6 in 10 of caregivers are not aware of available support, Sabbia added.
So what should companies provide in financial wellness programs?
“First of all, … the majority of companies do believe today it is their responsibility to help their employees on their own financial wellness. So we start there. That’s a really great thing,” she said.
But to provide meaningful ongoing support, they need to be looking at the right measures. Employees’ stress levels, for example, as well as whether they have enough saved for retirement based on their time horizon, and how confident they feel about reaching a level of security.
“So it’s a constant moving target depending on the company and the employees within that company,” she said. “But it should be ongoing metrics that drive the answer.”
You can find our Breaking Barriers: Women’s Financial Freedom Panel here or watch on your preferred streaming service.
Video Transcript
I get this question a lot.
Are we in a retirement crisis?
If I just look at the facts of what we see in our client book, even over the last couple of quarters, 401k balances are higher contribution rates are higher.
I’m not sure.
From that perspective, I see a crisis on the flip side as it relates to our people truly prepared for things like retirement or paying for health care costs in retirement.
Um That question, it varies, depends on generations for sure.
And for those folks that are either prepared or not, but I don’t see it as a retirement crisis.
For example, if we go to baby boomers, the reality is baby boomer.
Men actually outpace women by 87% in their account values inside of 401k plans.
When you go down to Gen X, it’s more like 53% the newer generations.
It’s like 23% which is great.
What you have to understand though is when we think about Gen Z and millennials at the end of the day, they’re dealing also with immediate credit card balances, paying off immediate debt.
So sometimes that is the priority versus long term planning.
And so to balance those two things are a little bit more difficult.
The Gen X cohort has a ton of challenges.
First of all, their feelings of financial wellness has dropped by five points in the last four years.
Out of all the generations, that’s the most market move as it relates to financial wellness.
When you think about what they’re dealing with, it’s often looks like Gen Z and millennials too that they actually have caregiving debt.
First of all, caregivers in the workplace is about 50% of what we find.
Employees are caregivers.
49% don’t want to tell anybody about it.
So it’s not like they’re walking around their workplaces with a T shirt that says I’m a caregiver, but in reality, they’re dealing with those additional expenses as they’re approaching retirement.
So it’s more of a struggle on average.
We find folks actually spend $7000 a year out of pocket.
When you think about that, I’m picking up food from my mom who’s recovering from a surgery.
I’m not later when she’s recovered, showing her the receipts to say you owe me.
And what if you have multiple folks in your family that you’re caregiving for it gets in the way of retirement?
So what should you know, companies of any size do as it relates to their financial wellness programs?
First of all, what I would say to you is the majority of companies do believe today, it is their responsibility to help their employees on their own financial wellness.
So we start there.
That’s a really great thing for those that have financial wellness programs.
They’re missing the mark on.
What’s the right measurement of success and going back to those measurements and measure constantly are behaviors changing.
Are people less stressed in the workplace?
Do they actually have the funds necessary for their particular retirement?
Do they feel confident in their preparation for retirement?
So it’s a constant moving target depending on the company and the employees within that company, but it should be ongoing metrics that drive the answer.
Is it working or not?
