When Life Happens, Savings Suffer: How events, income and other factors impact employee savings and spending behaviors
Employees face a consistent financial balancing act: how to address their current wants, needs and day-to-day expenses versus saving towards long-term goals, including their retirement. This balancing act can become more challenging as they face key life events that bring sometimes unseen financial implications. Strong financial habits today combined with the right professional support can help employees see through the challenges and build towards their long-term goals.
We looked at employees’ current savings and spending behaviors, including how much they save and how well they think they save. As a result, we found several factors that impact future savings both positively and negatively. These findings offer some key lessons for employers to use to better support their employees going forward.
Our findings are based on an online survey of 1,873 full-time employees.
Key Takeaways
- There are clear differences across age, gender, and education when it comes to how much people are saving and how they would characterize the strength of their savings behaviors.
- Those closest to retirement save the most, with 50% of respondents over age 65 saving more than 10% of their income.
- Men see themselves as better savers than women, with 51% of men rating themselves as “good or very good savers” compared to only 32% of women.
- Our study found a correlation between savings rates and education levels where with each increasing level of education attained, there is a subsequent increase in savings rates.
- Major life events can lead to financial decisions that negatively affect employees’ savings and retirement.
- 2 in 5 employees experienced at least one major personal or professional life event in the last year, and the overwhelming majority of those persons took major actions that reduced their savings.
- Among those earning $100,000 - $150,000 who lost a job, 73% reduced their emergency savings and 1 in 3 borrowed money from their retirement account.
- The presence of a formal budget is a significant factor in building stronger savings behaviors, as those with a formal budget tend to save more and see themselves as better savers than those who do not keep a budget.