Retirement plan participation is up, but don’t pop the champagne just yet. According to Morgan Stanley at Work’s just-released State of the Workplace Report, while more employees are enrolling in their 401(k) plans, many are also slamming the brakes on contributions. Why? Economic uncertainty, inflation fears, and that ever-familiar panic over whether the recession is around the corner or already here.
Participation in 401(k) plans held steady at a solid 86%—that’s the good news. The bad news? A growing number of participants are cutting back on how much they contribute. Nearly 4 in 10 employees say they’re pulling back due to concerns about inflation or recession. For Gen Z workers, it’s nearly 1 in 2. Think about that for a second—half of the youngest generation in the workforce is already too stressed to invest in their future.
Even more troubling, 67% of employees say they’re reducing savings across all accounts. Not just the 401(k), but their emergency funds, IRAs, and likely whatever they squirreled away in a coffee can during COVID.
This all paints a picture we’ve seen before: when the economy gets shaky, employees want support—and not just in the form of a cute enrollment brochure and a company match. They want real help: access to financial advisors, goal-based planning, and income strategies that don’t require a PhD in economics to understand.
And guess what? HR gets it. The same Morgan Stanley report shows that HR leaders also rank access to advisors, goals-based planning, and income solutions as their top three needs. So both employees and employers are speaking the same language for once—now they just need to act on it.
Once upon a time, offering financial wellness tools and advisory access was seen as fluff—something extra you used to pad your benefits page. That time is over. According to this survey, 69% of HR execs say retirement planning help is a top priority for attracting talent. Among employees who actually use their benefits, that number climbs to 82%.
And it makes sense. If someone’s struggling to decide whether to make their student loan payment or max out their Roth contribution, the company that helps them figure it out will win their loyalty. The company that says “call the fund company” won’t.
So yes, participation is up. But contributions are down. And employees are anxious. That’s the story of retirement right now. If you’re a plan sponsor, advisor, or TPA, the takeaway is simple: your participants need more than just access—they need answers. And if you give them those answers, you’ll not only help them retire with dignity—you’ll probably keep them around a lot longer too.
