A third of younger workers have dipped into retirement savings

Dive Brief:

A third of millennials and Gen Zers are dipping into their retirement accounts early, according to a March 11 survey from Betterment for Business.
Younger workers are saving for retirement; 88% are putting money away on a monthly basis. A fifth are saving less than $100 per month total, including for retirement. Nearly half (44%) plan to save less than $1 million for retirement, and 1 in 3 have already pulled from their retirement funds. Reasons include paying off credit card and student debt and supporting unexpected expenses, including medical bills. Nearly a quarter (23%) of respondents have used retirement money for discretionary expenses like travel and leisure activities.
"It is wonderful to see so many employers offering financial wellness benefits, retirement plans and matching contributions, but that alone isn't enough," Betterment for Business Director of Product Edward Gottfried said. "They should be doing more to educate young workers on things like how to best utilize these offerings, how much they should be saving, and the importance of not withdrawing money from funds early."

Dive Insight:

There's no question that workers — nearly 80% of them, according to recent research — are stressed about finances. And those stresses directly affect employers. Workers who are worried about money are 11 times more likely to have trouble sleeping, 10 times more likely to not finish daily work-related tasks, nine times more likely to have difficult relationships with their colleagues and twice as likely to be looking for a new job, according to a Salary Finance report.

How can employers help? Experts advise promoting pre-tax saving vehicles (such as HSAs and FSAs), positioning open enrollment as an opportunity for an annual financial check-up, and providing sound, unbiased financial advice.

Some employers are even re-thinking the notion of the traditional payday by providing short-term loans or allowing workers nontraditional ways to access their wages. The PayActiv and Even platforms, for example, offer workers early access to a portion of their earned wages to help with immediate financial needs.

Given the economic instability being wrought worldwide by the novel coronavirus, employers have an opportunity to take an honest look at their financial situations and priorities and encourage employees to do the same.