The pandemic increased employee stress about retirement, study says

Dive Brief:

  • While saving for retirement is the top financial goal for employees, 51% of workers said the pandemic somewhat or significantly increased their stress about being able to afford to retire when they wanted, according to a survey from TIAA
  • Overall, employees said they were satisfied with their company’s retirement offerings, but they showed increased interest (54% versus 51% in 2020) in guaranteed lifetime income annuities, which only one-third of responding employers said they offered. Employers seemed to register the deficit, too; 43% of those not currently offering GLI annuities said they were extremely or very interested in them, and 38% said access to GLI annuities was the feature most lacking from their retirement plans.
  • Among both workers and employers not interested in GLI annuity plans, cost was the primary reason, followed by the complicated nature of the plans. 

Dive Insight:

The pandemic increased stress generally, and it appears stress related to retirement plans was no exception. 

While the TIAA study did not investigate causes, circumstances that emerged relative to the pandemic (and other global events) may be a factor. High inflation and a struggling stock market have frightened those on the verge of retirement. A recent Pew Research survey found that 70% of Americans viewed inflation as a “very big problem” for the country, making it the top issue. It was followed by another economic concern: healthcare affordability. And of course, given the nature of the condition, anxiety caused by the pandemic may have caused more generalized anxiety

Guaranteed lifetime income annuities can address retirement anxiety by providing more security than other types of plans, as GLI plans can be invulnerable to inflation, market swings and other unexpected financial events. Through such plans, employees provide an initial, upfront investment and then receive set monthly payouts for life, even if they outlive the value of their investment or the economy is upended. 

However, buying into an annuity can come with a hefty price tag — often $100,000 or more for the initial investment, along with a slew of fees. Given workers’ financial demands related to everything from housing to child care to healthcare, it can be a significant task to set aside hundreds of thousands to invest in an annuity fund, even over many years. 

Still, the TIAA survey shows workers who are familiar with it are interested in the GLI concept. The number of workers interested in in-plan GLI annuities if the cost were lowered jumped from 54% to 73%, the survey showed.  

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