Organizations have an opportunity to help their employees meet shifting goals during this period of financial uncertainty

American workers are vowing to take control of their financial futures by more carefully managing their retirement savings according to a survey of financial security conducted in late 2020 by the Harris Poll on behalf of Empower Retirement and Personal Capital. The survey also reveals the drastically different levels of optimism about the economy between men and women as well as a heightened desire for more personalized financial advice.

As a result, employers who offer retirement savings plans have an opportunity to help their workers navigate this new era of financial uncertainty. Indeed, employees tell us they’re searching for more personalized and targeted advice as they adjust financial plans and expectations. Read the full report here.

Taking control during times of financial uncertainty

Our survey of financial security polled workers who remained employed during the pandemic (as well as retirees), but even these fortunate Americans were stung by the level of financial uncertainty around them. In December 2020, just 52% said they’re confident in the 2021 economy versus 69% in April. Although they anticipate improvements in the second half of the year, they’re especially concerned about the economic effects of more lockdowns.

Yet, importantly, they view the pandemic as a wake-up call to take control of their financial futures. They’re saving more (70% of respondents) and spending less on non-essentials. And 65% of respondents say they’re confident in their ability to achieve their savings goals. That said, employees don’t expect massive annual gains — slow and steady is the new normal.

Financial uncertainty is more prevalent among women than men

Our survey reflects a trend that has been widely reported: The pandemic has had a greater impact on women’s careers and income than it has on men’s. Fewer women feel optimistic or in control of their finances — 33% versus 44% of men. More women report they “barely have their head above water” — 31% as opposed to just 19% of men.

Not surprisingly, the survey of financial security also found a wide confidence gap. For example, women are less confident in their ability to build emergency savings — 55% compared to 69% of men. And just 62% of working women are confident in their job security compared to 72% of men. Only 54% of women are confident they can retire when they want compared to 67% of men.

There was no “run on the bank”

Data from our own platform reveals that the CARES Act did not lead to a panic surge in early withdrawals during this period of financial uncertainty. Only 4.4% of eligible participants from plans using the Empower platform made CARES Act withdrawals through December. The average disbursement was $16,000. Participants who took out cash withdrew, on average, 43% of their balance — and a third of withdrawals were for the total amount. Only 17% of participants taking CARES Act withdrawals had been terminated.

Workers are turning off autopilot and taking control of their financial futures

If the pandemic reminded employees that the larger economy is uncertain, it also energized them to take control of their financial futures by turning their attention to personal retirement plans, with a specific commitment to saving more as a cushion against the unknown. Twenty-five percent of respondents in our survey of financial security said saving for retirement is their top financial goal in 2021, and 38% plan to save more from their paycheck. (That number jumps to 47% of parents.)

And while workers respond favorably to online advice and digital tools such as the Personal Capital investment management app, they also want personal, human advice. Indeed, 48% of respondents to the July 2020 survey said they would only trust a human advisor when planning for retirement. Not surprisingly, Empower participant behavior in response to the pandemic shows a 109% increase in appointments for one-on-one advice.

These findings suggest employees will be receptive to retirement managed accounts — employer-sponsored retirement plans overseen by registered investment advisers. These plans combine robust technology platforms and online user experiences with human assistance from call centers staffed by trained registered investment adviser representatives.

Keep it simple, make it personal

Workers lacking confidence in the economy are taking control of their financial futures. And employers have an opportunity to support them in this process by offering more targeted advice to help them navigate this time of financial uncertainty.

Key takeaways

• Employees want more specific and targeted advice from employers and financial advisors.
• There’s a big opportunity for employers to offer targeted expert advice to female workers.
• Even if the CARES Act provisions are renewed by the new Congress and the Biden administration, we don’t expect a “run” on retirement savings given Americans’ renewed focus on financial stability and understanding of the value of long-term retirement planning.
• Only 11% of respondents said they had recently sought financial advice from employers, suggesting there is room for employers to play a greater role.

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