PNC Institutional Asset Management® (PNC IAM) conducted a survey[1] to gauge the effects the past year has had on retirement readiness, to aid clients in optimizing their annual education campaigns and to provide data to inform the ongoing development of our financial wellness tools and resources. Results showed that employees remain concerned that day-to-day financial challenges continue to impact their ability to stay on track to retire comfortably and on time. We asked Bradley Bonno, PNC IAM’s Director of Financial and Retirement Education Services, to discuss any insights he thinks can be gleaned from our findings.

Financial Situations Relatively Static Through Pandemic

As displayed in Chart 1, 60.3% of employees, more than three times the percentage of the next highest response, said their financial situation had not changed since the outbreak of COVID-19. The smallest group of respondents (3.2%) said their financial situation was much worse. However, it is not all good news; a higher percentage of employees said their financial situation was somewhat worse or much worse (21.5%) than somewhat better or much better (17.9%).

Chart 1: Since the Outbreak of COVID-19, how has your financial situation changed?

 

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Insight from Brad

These results are better than expected, especially at the 60.3% start of the pandemic. However, many people weren’t in great financial shape to start with. Pre-COVID-19, Employee Benefit Research Institute’s 2019 Retirement Confidence Source: PNC Survey found that 40% of American workers had less than$25,000 in retirement assets and a 2018 PlanSponsor.com study, “Study Reveals Financial Wellness Needs of Employees,” found that 87% of Americans were stressed about their finances. Although retirement accounts weren’t emptied en masse, our survey found that more than one in five employees have experienced additional financial difficulties since the outbreak of COVID-19 (not to mention other concerns like health, mental and emotional wellness). Accordingly, plan sponsors may want to consider ways to provide additional financial wellness support to address these current issues, while also addressing issues that existed before the pandemic.

Planning for Retirement Remains Top Financial Concern

Employees identified “Other” top concerns such as student loans, buying a house, and general debt and saving, and selected “Everyday Financial Wellness” as an important issue, but the highest number of employees (39.5%) said planning for retirement remained their biggest financial concern. Only 13.1% of employees reported having no financial concerns at all (Chart 2).

Chart 2:  Right Now, My Biggest Financial Concern Is...

 

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Insight from Brad

While we recognize the meaning of “Everyday Financial Wellness” can vary across workforces, it’s notable that 1/3 of respondents identify this as a concern. Only 13% of employees said they had no concerns, which suggests the overwhelming majority do have worries. To help people better prepare for retirement, we need to first help them address their day-to-day financial challenges. While many organizations focused their attention on keeping the organization afloat and functioning in a remote work environment for a portion of 2020, plan sponsors we work with have now prioritized educating employees both in terms of their retirement plan and general finances. In the past six months, plan sponsors were more receptive to our assistance in ramping up employee financial education — both through seminars and written communications — and exploring the tools and resources we can provide to address both retirement readiness and financial wellness.

Most Employees Stayed the Course

The majority of survey respondents (65.3%) made no changes to their retirement plan contributions and/or investments. Relatively few respondents changed their investment allocation (8.5%). The fewest number of employees decreased contributions (4.0%). In fact, over three times as many employees increased contributions (12.8%) than decreased (Chart 3).

Chart 3: What Changes Have You Made to Your Retirement Plan?

 

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Insight from Brad

We regularly encourage clients to educate their employees about market fluctuations and to avoid making short-sighted decisions regarding their retirement accounts. These results suggest to me that the messages we’ve been delivering over the years have made an impact. It’s exciting to see so few participants decreased their contributions. It’s really encouraging – and I might say surprising – to see three times as many participants saw an opportunity to increase their contributions! Retirement savings may have increased because, like it or not, people stayed home more and spent less money on entertainment or eating out. Regardless, I see positive news in employees making it through the pandemic without too much disruption to their retirement planning.

Retirement Most Popular Despite Broad Interest in Financial Education

“Five Challenges to Your Retirement Plan” was identified by nearly half of survey respondents (45.9%) as a financial education topic that would be most beneficial to them. “Financial Fitness” came in second with 34.7% followed by “The Importance of Saving” at 23.3% (Chart 4).

Chart 4: Which Financial Education Topics Would be Most Beneficial?

 

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Insight from Brad

While the retirement topic was the most popular, clearly what we see here is interest in a broad range of topics. That means different priorities for different employees, and likely many employees with interest in more than one issue. The main takeaway here, for me, is that plan sponsors should ask their employees what they want to learn more about. We’ve found a great way to do that is to offer surveys or to use in-meeting live polling to gather information and feedback. This feedback can then be used to customize the education offered over the course of the year or tailor a presentation in real time. Beyond that, I believe if employees see their feedback is driving the education content being delivered as well as the method through which it’s being delivered, they’re more likely to attend seminars, take advantage of the tools and resources offered, and engage in the retirement plan overall.

For more information about the Employee Education Solutions offered to our Fiduciary Investment Services clients, please reach out to your PNC Representative or Bradley Bonno at bradley.bonno@pnc.com.


Accessible Version of Charts

Chart 1: Since the Outbreak of COVID-19, how has your financial situation changed?

Much Better Somewhat Better About the same Somewhat Worse Much Worse
4.2% 13.7% 60.3% 18.3% 3.2%

Chart 2:  Right Now, My Biggest Financial Concern Is...

Planning for retirement Everyday financial wellness No financial concerns at this time Other (Please explain)
39.5% 33.3% 13.1% 13.9%

Chart 3: What Changes Have You Made to Your Retirement Plan?

Increased contributions Decreased contributions Changed investment allocation No changes Not applicable/ Not enrolled
13% 4% 9% 67% 6%

Chart 4: Which Financial Education Topics Would be Most Beneficial?

Market Volatility CARES Act Financial Fitness Five Challenges to Your Retirement Plan The Importance of Saving Identity Theft Student Debt Other (Please specify)
15.9% 3.3% 23.7% 31.4% 11.8% 9.2% 8.8% 5.3%