Employees fear how the election and inflation may impact their retirement

Employees are regaining their confidence around their ability to save enough for retirement, but will it be enough after a few tough years and the challenges that still remain? 

According to the Employee Benefit Research Institute's annual Retirement Confidence survey, two-thirds of employees feel confident in their retirement prospects, a figure unchanged from 2023. However, inflation and the upcoming presidential election are top concerns for employees, as they fear changes around retirement programs due to these factors. 

"We still have the lingering inflation problem and there's still uncertainty about the economy," says Craig Copeland, director of wealth benefits research at EBRI. "People have concerns about the government changing the systems — what will a different administration do, or if the current administration is reelected, what they might do, considering which side of the political spectrum you're on." 

Read more: How Biden and Trump's views on abortion and student loans will impact employers 

EBRI's survey found that 79% of employees are concerned about governmental changes to the retirement system, and as 88% of workers expect Social Security to be a source of income in retirement, this may be warranted. Yet many workers also understand the need to have multiple sources of income in retirement, as Social Security alone won't be enough to support their lifestyle. 

"There is some understanding that many people are likely to have a benefit that's less than what they expect," Copeland says. "There's the likelihood or increased expectation of relying upon your workplace savings plan." 

Yet robust workplace savings programs continue to be a top priority for employees, who are also interested in other financial wellness benefits that support them throughout their lives. Emergency savings plans, for example, are highly valued by employees, who want them to be included within their retirement plans. A provision within SECURE 2.0 enables employees to allocate a percentage of their income, up to $2,500 per year, to pay for emergency expenditures without tapping into a retirement fund. 

"People are very interested in emergency savings programs, and the most valuable improvement people saw in their direct contribution plan was to have an emergency savings account," Copeland says. "Getting those finances stabilized is a really big thing that can support employees with that confidence." 

Read more: How SECURE 2.0 pushes employers to support emergency savings 

Ensuring that workers feel confident with their financial wellness requires effort from employers too, which can be "hit or miss," Copeland says. But a well-rounded retirement benefit that includes a full-spectrum of support is ideal for helping the largest share of workers reach their retirement goals. 

Copeland says one-on-one coaching is one way to have a personalized impact on an employee's financial picture, and in fact, their survey found that those who have done the calculations about what they can afford in retirement are more confident than those who don't have an established plan. Preparedness is key, at any age. 

"There are so many issues unique to particular people, whether they're trying to buy a home, or they're trying to pay for college, or they have a debt problem," Copeland says. "One-on-one help, and reinforcing that help, is going to be the one thing that can get them to not be focused on their finances at work, but be focused on work."