High health care costs are forcing consumers to make tough decisions. From foregoing surgeries and doctor visits to skipping out on COVID-19 care and reducing their HSA contributions, recent studies show that consumers are making a number of significant health sacrifices in order to save money.
According to a new survey from asset management firm Allspring Global Investments, retirement decisions are affected, too. In its 2021 retirement survey, nearly half of all workers told Allspring they would retire earlier if medical coverage wasn't dependent on employment. The majority also believe that Social Security won’t be able to adequately cover their retirement expenses.
Retirement support falls short
In the Allspring survey — which gathered input on how workers view their financial preparedness for retirement — workers shared a dire outlook. Many feel their savings and government benefits won't be enough to meet their needs in retirement.
- 76% are concerned Social Security will not be sufficient to cover retirement expenses
- 73% of retirees without a pension say they're not confident their savings will last (in contrast, 83% of those with a pension say they’re "very or somewhat confident" that theirs will)
- 38% of retirees are unsure how long their retirement savings will last
- 38% of workers state: "I am so behind. I don’t know how to get my retirement savings back on track."
- 3 in 4 of Gen Zers, millennials and Gen Xers believe the eligibility age for Social Security will increase before they retire
Exacerbating this issue is workers' choice of when to retire. Of retired survey participants, 51% say they left work earlier than planned, at an average age of 59 — with health issues and employer decisions cited as the top reasons. If the retirement age gets pushed back again, as a majority of workers under 57 (3 out of 4) believe it will, many more could face the same circumstances.
Unfortunately, early retirement means permanently reducing Social Security benefits, and sometimes by a significant amount. It can also mean missing out on the highest earning years of a worker's career, which causes a further reduction in eligible Social Security benefits — as well as potentially foregoing the highest retirement savings years for a worker.
Other workforce trends
The Allspring report highlights some other trends in the workforce, particularly ones that have emerged as a result of the pandemic. In a separate survey from ResumeBuilder.com, 43% of people said they were planning to leave their jobs in order to look for remote work by the end of 2021. According to Allspring's more recent survey, 3 in 10 respondents say they’d rather quit their jobs than go back to working in the office — a sentiment the survey noted was common among young people and residents of cities.
Meanwhile, another 28% of workers say they've either relocated or plan to do so in the next 24 months, and financial reasons are among the top motivators. Some of the most popular reasons for relocating include lower cost of living (36%) and lower housing costs (34%).
Methodology: Allspring Global Investments’ 2021 retirement survey was conducted by The Harris Poll between July 21 and Aug. 4, 2021; respondents consisted of 3,402 U.S. adults who are primary or joint household financial decision-makers.
The sample consisted of 2,304 working Americans ages 18 to 75 and 1,098 retired Americans. Generations are defined as follows: