Study Finds Increase in Employees' Financial Wellness


NEW YORK — The 2013 Workplace Benefits Report study conducted by the Bank of America Merrill Lynch plays an increasingly significant role in helping the American workforce achieve financial wellness. Based on a nationwide survey of more than 1,000 employees from companies of all sizes, this research offers new insights into the availability, utilization and evolution of these workplace benefits — from 401(k) plans and health savings accounts to financial advice and education. Key findings include:

· More needs to be done to help employees confidently transition into retirement

· Tax-advantaged saving for medical expenses is becoming the norm, though many are saving less for retirement as a result of rising healthcare costs

· 401(k) contribution rates indicate that the majority of younger workers may be comfortable with an automatic deferral of 5 percent

· One out of four “pre-retirees” — employees who indicate being within five years of retirement — expects to have less than $250,000 saved

· Workers are willing to give up portions of their salary for guaranteed retirement income

· Employees are looking to their employers for access to one-on-one advice from a financial professional

“Corporate benefit leaders, the retirement services industry and legislators must continue to work together to improve and protect the effectiveness and health of our country’s retirement system,” Kevin Crain said, head of institutional retirement and benefit services for Bank of America Merrill Lynch. “We see many employers actively working to empower employees to take greater control of their financial success, as well as enhancing their financial benefits to ensure they are results-based, easy to use and encourage healthy behaviors.”

For many employees, achieving financial wellness is increasingly tied to preparing for income needs during retirement, addressing the rising cost of health care and balancing competing financial demands throughout their lifetime. Although employers have made strides in recent years to help put employees in a better financial position, this study reveals a need for greater focus on the retirement readiness of the nation’s workforce and access to personalized advice that goes beyond retirement goals.

Retirement Readiness

Two-thirds of employees indicate that their focus on retirement goals has increased during the last five years. However, 85 percent feel they are not saving enough, and 60 percent believe it will be difficult to save enough to support their standard of living during retirement.

This lack of confidence may be one of the reasons why 78 percent see themselves working into their late 60s or 70s, up from 72 percent one year ago. Another reason may be that workers in later stages of their careers often find themselves on their own when it comes to transitioning into retirement. In fact, only 34 percent of workers feel that their employer provides sufficient advice to help employees with this transition.

When it comes to preparing for long-term financial security, the importance of workplace retirement savings plans is not lost on employees. The study found that 71 percent believe their workplace retirement savings plan will be their largest or second-largest source of retirement income, followed by Social Security and other savings and investments.

Health Savings

The rising cost of healthcare remains a top concern for employees. Eight out of 10 indicate that they have experienced an increase in healthcare costs during the last two years —more than half say they are saving less for retirement as a result.

Seventy-six percent of employees indicate that their company now offers an HSA option, among which 38 percent participate in this tax-advantaged savings vehicle. HSA participation increases to 50 percent among pre-retirees, however, our research finds that 35 percent of younger workers are also using these vehicles to start saving early for current and future medical expenses. Nearly half of all respondents who participate in an HSA or flexible spending account began doing so as a result of rising healthcare costs.

Saving Behaviors and Perspectives

Other notable retirement saving behaviors and perspectives of our nation’s workforce revealed through our 2013 study include:

· Two-thirds of employees contribute 5 percent or more of their salary to a 401(k) plan. Among pre-retirees, 56 percent contribute at least 10 percent of their salary to their 401(k), and 29 percent contribute 15 percent or more to their 401(k). Among “early starters” — those under the age of 30 saving in a 401(k) plan — 55 percent contribute 5 percent or more of their salary and only 8 percent of these younger workers have a contribution rate of less than 3 percent.

· Consistent with findings from our 2012 research, 84 percent of respondents said their employer provides some form of 401(k) match, and nearly four out of five plan participants contributed at least enough last year to meet the match — among pre-retirees this increases to 90 percent. However, only 20 percent of all plan participants contributed the maximum legal amount last year, and only 37 percent of pre-retirees are maximizing their annual contributions.

· Consistent with our 2012 research, when asked about the desire for a guaranteed source of income during retirement, four out of five employees would be willing to give up 5 percent or more of their salary if it meant having reliable income to help them live comfortably during their later years, and 38 percent would be willing to give up 10 percent or more. Among pre-retirees, those willing to give up 10 percent or more of their salary for such a guarantee climbs to 52 percent. 

Making Advice More Accessible

When asked what financial matters they need the most help with, 59 percent of employees cited advice and guidance around saving for retirement, followed by managing debt, budgeting, and planning for healthcare costs. The majority of employees are seeking advice across all aspects of their financial life — including two-thirds of female employees and half of male.

“Offering employees access to meaningful advice and education can have a significant impact on their financial health,” Crain. “Helping them navigate the road to and through retirement can lead to positive long-term outcomes for both employees and employers.”

Financial Wellness Score

Employees indicate that there are several financial, psychological and emotional influences in their lives that have a negative impact on their ability to save adequately for retirement and to achieve financial wellness. These include rising healthcare costs, not knowing how much they will need to retire or having a sense that they will never be able to save enough, competing financial obligations and desires, uncertainty about how or where to invest and a general fear of investing.

For information about the Financial Wellness Score, and to review the full findings from the study, “2013 Workplace Benefits Report: Employees’ Views on Achieving Financial Wellness,” visit

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