The impact of Life’s Financial Moments on savings and retirement
Life Events Experienced in 2022
Significant reduction in hours and/or pay
Significant unplanned health issue
Death of a direct family member
Layoff/lost job
Bought and/or sold a house
Got married
Birth/adoption of a new child
Got divorced
When significant personal or professional life moments hit, they often come with financial implications tied to them. Without careful planning, those life moments can lead to financial decisions which deliver negative impacts on retirement and overall savings.
Around 2 in 5 employees experienced at least one significant life moment in 2022, with unplanned health issues and reduction in hours and/or pay the most frequently cited.
Younger workers experience life events as they’re the most likely to get married, have kids or buy their first house.
58% of 18–24-year-olds and 56% of 25–34-year-olds reported at least one major life event in 2022
Experienced at least one life moment in 2022
Under the surface, these events come with major financial impacts to employees’ savings and retirement plans. Let’s look closer at three of the most impactful events on employee finances.
The financial impacts of losing a job
Affecting 8% in 2022
Losing any job is a painful experience and brings immediate financial consequences.
of those who lost a job in 2022 took at least one major action that reduced the amount of their savings.
Savings Impact of Losing a Job
While it may be expected that lower income earners would reduce their savings when they lose a job, this type of event affects all workers.
Among those earning $100,000 to $150,000 who lost a job, 73% reduced their emergency savings and 1 in 3 borrowed money from their retirement account.
Losing a job is especially painful for those closest to retirement, often dramatically affecting their retirement plans.
Almost half of those aged 45+ who lost a job reduced their retirement savings.
Even more drastic
of those aged 55-64 who lost a job borrowed directly from their retirement account.
The financial impacts of a reduction in hours and/or pay
affecting 13% in 2022
Having your income cut leads to the need to re-evaluate savings and spending behaviors.
of those who reported a significant loss of hours or pay in 2022, took at least one major action that reduced their savings.
Savings Impact of reduced hours/pay
Aged 25-54 took a hardship withdrawal from their retirement account because of their pay reduction.
With a smaller amount of income, retirement savings can sometimes be the first casualty.
Among those earning $100,000 to $150,000, half said they reduced their retirement savings because of their loss of hours/pay.
Savings Impact of reduced hours/pay by salary
The financial impacts of unplanned health issues
affecting 13% in 2022
Unplanned health issues bring unexpected financial tolls.
of employees who experienced a major health issue in 2022 took at least one major action that reduced their savings.
Savings Impact of Unplanned Health Issues
Key life moments can carry lasting financial implications, especially without key professional support. There’s a strong correlation between savings behaviors and sentiments and impactful life moments.
Those who experienced a major life event in the last year save less and characterize themselves as worse savers than their counterpart who did not experience a major life event