A recent survey shows over 40 per cent of workers believe that future generations of retirees will be worse off than those currently enjoying retirement. This raises a significant question: why is saving for retirement harder now than it was 50 years ago?
The answer involves several factors affecting today’s workforce, and it’s important for employers to understand these challenges so they can better support their teams.
Changing Retirement Trends
One of the biggest changes over the past few decades is the decline of traditional pension plans. Fifty years ago, many employees relied on employer-sponsored pensions, which provided a steady income in retirement. Nowadays, these defined benefit plans are becoming rare, replaced by defined contribution plans that put the responsibility for saving squarely on the employees. This can create uncertainty and stress for workers who may not feel prepared to plan for retirement.
On top of that, there’s a lot of confusion around investment options. With various choices available today—like RRSPs and TFSAs—employees often struggle to figure out where to invest their money. This confusion can lead to inaction, putting their retirement savings at even greater risk.
Saving Struggles
Many North Americans are also dealing with stagnant wages and rising living costs, which make it more difficult to save for the future. With housing prices climbing and everyday expenses on the rise, employees often find there’s barely anything left at the end of the month to put toward retirement savings.
We’re also living longer than ever, which means those savings need to last even longer. The survey also shows that we need to prepare for higher healthcare costs, which can be unpredictable and burdensome as we get older. This all contributes to an environment where workers feel overwhelmed and uncertain about how much they really need to save to secure their financial futures.
How Employers Can Help
Recognizing these challenges is the first step toward making a positive impact on an employee’s financial wellness.
Here are some insights to consider on how to support your team with retirement planning:
You can support your team in building a more secure financial future by recognizing the barriers they face and providing clear solutions. Contact us so we can work together to create strategies that work best for you and your team.
Suggested Reading
3 Ways to Make Retirement Benefits Work for Your Team
Bridging the Retirement Readiness Gap with Pension Plans
Retirement Revolution? How to Adapt to Changing Trends
Additional Resources