The traditional “five-year plan” is becoming a thing of the past for the average American, according to recent research. A survey of 2,000 employed Americans has revealed that people are now looking ahead an average of 12 years when it comes to financial planning.
The study, conducted by OnePoll for SurePayroll in honor of National 401(k) Day, unveiled that respondents no longer find the traditional five-year plan feasible. A staggering 74% cited rising household expenses, 59% pointed to inflation, and 43% highlighted school debt as factors making the five-year plan less attainable than ever.
Interestingly, both Gen Zers (53%) and Baby Boomers (54%) expressed concerns about receiving Social Security benefits, further eroding confidence in the feasibility of the five-year plan.
The survey also found that 55% of Americans believe they need to reevaluate what constitutes a “necessity” to allocate more funds toward retirement.
To get a head start on saving for the future, 57% of respondents are already actively saving for retirement. Additionally, 39% would be willing to take on a second job, while 48% would prioritize necessary purchases over impulse buying, and 46% would consider working extra hours at their current job.
Gabriela Rodriguez, 401(k) product marketing manager at SurePayroll, emphasized the importance of employers aiding employees in achieving their financial goals, highlighting its benefits for small business growth, employee retention, and community well-being.
Despite these efforts, a quarter of employed Americans (including 22% of millennials) admit they are far from reaching their retirement goals today, with 59% wishing they had started saving earlier. Furthermore, one in eight respondents does not feel adequately prepared for retirement.
While most employees with access to a 401(k) plan are enrolled (71%), one in five are not (19%). Those working at small businesses are more likely to participate in their employer’s 401(k) plan (82%) compared to those at private companies (72%) or public companies (61%).
The survey revealed that the employer’s contribution adds value for participants (57%), doubles the value when they match (56%), and offers valuable tax benefits (49%).
In addition to employer-provided retirement plans, 57% of respondents have a separate retirement fund. Among those who have not yet begun saving for retirement, half are waiting for their employer to provide more information, while 43% cited a lack of time as the main obstacle.
The study also highlighted the critical role that benefits like retirement planning play in employees’ perception of their employers. A 401(k) plan with a match (47%) ranked second only to health care (49%) as a non-cash benefit that influences the decision to stay with an employer.
For those at small businesses, a 401(k) with an employer match (50%) is particularly appealing when considering job retention.
Financial security is top of mind for many Americans, with goals including putting their children through college (45%), paying off school debt (42%), and purchasing their dream vehicle (41%). Additionally, 40% aspire to travel, and 33% dream of a comfortable retirement.