New research finds employees are prioritizing
saving for retirement as their views on how and when to retire
changes
The picture of retirement is evolving with more Americans
turning 65 in 2024 than any year1 before. According to new research
from Principal Financial Group®, expectations around how and when
to retire by generation vary greatly – placing increased focus on
employee engagement and personalized investment strategies to help
improve financial security and retirement readiness.
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Our third wave of insights. (Graphic:
Business Wire)
Phased retirement appeals to younger workers who want to
retire earlier
According to the Principal Financial Well-Being IndexSM, among
Americans in the workforce, gradually decreasing hours is the most
desired way to retire (52%) and is most preferred by Generation X
(67%) and millennials (56%). Baby boomers and Generation Z report
similarities in how they want to retire, with nearly half
preferring to move immediately from working full-time to not
working at all. This echoes the most common approach taken by
current retirees surveyed2, a group in which just over one quarter
(28%) either transitioned careers or gradually phased down from
their primary career.
“Attitudes and expectations for retirement continue to evolve,
and we expect the desire to approach retirement in phases will
continue to grow with future generations,” said Chris Littlefield,
president of Retirement and Income Solutions at Principal®.
While there are some similarities in how generations want to
retire, they have different expectations on timelines and the age
at which they plan to retire. The youngest generation, Gen Z,
expects to retire at 55 – approximately 10 years earlier than baby
boomers (68) and Gen X (64), and four years sooner than millennials
(59).
Employees prioritize saving for retirement
The survey revealed employees are focused on balancing basic
needs with long-term savings outcomes against a backdrop of ongoing
economic pressures that continue to top their list of concerns.
Employees of all generations ranked saving for retirement as their
top financial priority, followed by affording basic needs and
paying off consumer debt3.
"Saving for retirement is the No. 1 financial priority for
employees surveyed, which validates that access to workplace
benefits and financial wellness programs is helping Americans save
for retirement and achieve better financial outcomes,” Littlefield
said. “Going forward, increased personalization as well as tailored
savings and investment strategies that take into account an
individual’s financial goals, lifestyle, health care needs,
dependent care obligations, retirement income expectations, and
other unique factors will help achieve improved financial security
in retirement.”
Retention and recruitment of older employees critical for
business success
Employee interest in phased retirement has added value for
employers. Most employers (77%) agree that the knowledge older
employees have about their company is crucial to their business’s
success. Employers concerned with “having valuable employees
retire” are more likely to take actions to either retain them or
hire employees who previously retired from other companies.
Despite this, not all employers have experience with offering
phased retirement. Only 11% of small and midsized businesses4
reported they offer phased retirement job opportunities on a
regular basis compared to nearly one quarter of large businesses5.
However, interest is there, as 61% of businesses that don’t offer a
phased retirement still receive questions from employees about the
options.
See all results and insights from the latest Principal
Financial Well-Being IndexSM (PDF).
1According to the Alliance for Lifetime
Income
2This wave included a survey of 137
individuals between the ages of 50 and 75 who consider themselves
retired or have previously fully retired and gone back to work.
3In order to be included in the survey
sample, employees must work full-time, and their employer has to
offer either health insurance or retirement as an employee
benefit.
4Businesses with 2-499 employees
5Businesses with 500-10,000 employees
About the Principal Financial Well-Being IndexSM
The Principal Financial Well-Being IndexSM surveys business
owners, decision makers and business leaders aged 21 and over who
work at companies with 2-10,000 employees and offer either health
insurance or retirement as an employee benefit. The nation-wide
survey, commissioned since 2012, examines the financial well-being
of American workers and business employers. In 2020, the Well-Being
Index was transformed from an annual survey to a regular pulse,
offering three waves, revisiting questions and measuring sentiment
regarding timely issues in the small and midsized business
marketplace. In the first pulse of the Well-Being Index in 2022,
the employee audience was added to the survey to compare and
contrast key sentiment from employers. The survey was commissioned
by Principal® and conducted online by Dynata from November 6-13,
2023, with a total of 500 business owners, decision makers and
business leader participants and a total of 200 employee
participants. This wave included a survey of 127 individuals who
consider themselves retired or have previously fully retired and
gone back to work. The research report focuses on providing a
holistic perspective on key trends and timely issues in the small
and medium business market.
About Principal Financial Group®
Principal Financial Group® (Nasdaq: PFG) is a global financial
company with 19,500 employees1 passionate about improving the
wealth and well-being of people and businesses. In business for
more than 140 years, we’re helping more than 61 million customers1
plan, protect, invest, and retire, while working to support the
communities where we do business, and build a diverse, inclusive
workforce. Principal® is proud to be recognized as one of the 2023
World’s Most Ethical Companies® by Ethisphere2, a member of the
Bloomberg Gender Equality Index, and a “Best Places to Work in
Money Management3.” Learn more about Principal and our commitment
to building a better future at principal.com.
1 As of September 30, 2023
2 Ethisphere, 2023
3 Pensions & Investments, 2023
Dynata is not an affiliate of any company of the Principal
Financial Group®
Insurance products issued by Principal National Life Insurance
Co (except in NY) and Principal Life Insurance Co. Plan
administrative services offered by Principal Life. Principal Funds,
Inc. is distributed by Principal Funds Distributor, Inc. Securities
offered through Principal Securities, Inc., member SIPC and/or
independent broker/-dealers. Referenced companies are members of
the Principal Financial Group®, Des Moines, IA 50392.
© 2024 Principal Financial Services, Des Moines, IA 50392,
USA.
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Ashley Miller, miller.ashley@principal.com, 515-878-6295
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