fizzcase | Istock | Getty Images
Employees’ 401(k) accounts may have taken a hit in the meantime Recent market volatilityBut this is not the only reason why the balance may be low.
a New study from Morgan Stanley at work 62% of employees have reduced their short- and long-term savings contributions amid concerns over high inflation and a possible recession.
Nearly a third — 31% — of respondents reduced contributions to their 401(k) plans. Meanwhile, 26% said they had cut back on debt repayments, 25% had reduced their long-term savings, 24% had reduced emergency and short-term savings, 19% had slashed to health savings accounts. has reduced the contribution and reduced the contribution by 13%. A college savings fund.
In addition, 71% of employees said that money-related stress had negatively affected their work and personal lives, an increase of 7% from 2021. Also, 84% of human resources leaders said they are concerned that personal financial issues are affecting employees. productivity.
The online survey was conducted between July 13 and 19 and involved 1,000 working adults and 600 human resource leaders.
According to Brian McDonald, Morgan Stanley’s head at work, less savings is related because “more money is being created in the workplace than anywhere else”.
This includes 401(k) and deferred compensation plans, employee stock ownership plans, emergency savings accounts and student loan assistance.
“Employees still view the 401(k) plan as the central thing they consider when they think about benefits at work,” McDonald said. “It certainly hasn’t changed.”
The fact that employees reduce their 401(k) contributions year after year, McDonald said, is because they’ll miss out on taking full advantage of their work retirement plans and the compound interest that helps them build wealth over time. can do.
Certainly, it can be tough to set aside money for long-term goals as costs like rent and school tuition rise, McDonald said.
“Start by maxing out as much as you can — which isn’t allowed, but as much as you can — in your 401(k) plan,” McDonald said.
Ridofranz | Istock | Getty Images
According to McDonald’s, company executives are doing more to provide employees with overall financial benefits and spending more money on those benefits.
“The conversation is more around financial well-being, and this trend is certainly gaining momentum,” he said.
The survey found that 60% of employees are paying more attention to reviewing their financial benefits than a year ago.
In addition, 84% of HR leaders say that employees have requested financial benefits that their companies do not provide, up from 78% in 2021.
This is even as the survey found that more executives now say their companies are delivering quality financial returns.
Yet 96% of HR leaders said their companies need to do more to help employees better understand how to maximize the financial benefits available to them, up from 93% who said last year. at over.
Meanwhile, 89% of employees agree, up from 87% in 2021.
When it comes to financial benefits, the top choice cited by employees was access to a financial advisor with 52%; This is followed by goal-based retirement investment plans, with 48%; and access to retirement tools and calculators, 46%.
However, HR leaders cited different priorities, with goal-based retirement investment planning coming first with 47%; Next up with 43% access to retirement planning tools and calculators; Retirement Planning Workshops, 40%; and access to a financial advisor, 40%.