A third of U.S. workers are considering a job change or retirement in the next 12 to 18 months, signaling the continuation of a tight labor market in 2022, according to a survey released today by Principal Financial Group. The survey results suggest employer benefits and retirement plan options will play a role in workers’ decisions.
According to the survey, 12% of workers are looking to change jobs, 11% plan to retire or leave the workforce, and 11% are on the fence about staying in their job—showing 34% of workers are unsettled in their current role. Employers echoed the findings, with 81% concerned about increased competition for talent.
“We see from this survey and others this year that benefits continue to play a crucial role for workers. It’s possible that inflation has changed that somewhat, with people needing a bit more income for daily expenses. Overall, however, you’ll see from the survey that almost as important as pay is ‘feeling valued in the workplace,’” Sri Reddy, retirement and income solutions senior vice president, tells PLANSPONSOR. “How can employers show they value their workers? In large part, through robust benefit plans that show they are taking care of them now and into the future. Things like a strong company match, financial wellness resources, and working with employees to improve their overall sense of financial security can all contribute to employee satisfaction.”
What Job Changers Want
Workers responding to the survey identified a strong focus on retirement planning and security when making employment decisions. More than three quarters (77%) said the COVID-19 pandemic has driven them to focus more on saving for retirement. When evaluating new job opportunities, 91% thought an employee match was the most important retirement plan feature, 80% said eligibility, 74% said vesting requirements for company match, 73% said investment options on offer and 70% withdrawal options at job change or retirement.
“The ranking made sense to us in terms of workers looking for immediate value in retirement plans,” Reddy says. “An employee match and eligibility for a plan are near-term indicators of an employer being competitive in their retirement plan offering. Investment options, as well as withdrawal options, also ranked high, but these factors are generally seen as being years in the future for job hunters, and so may not be as pressing. That said, vesting requirements, investment options, and withdrawal options all have a major impact on long-term savings. It’s up to the plan sponsor, and recordkeepers, to explain the importance of these features in creating long-term wealth.”
Retirement plan sponsors appear more focused on meeting workers’ retirement savings needs. The survey showed that 67% of plan sponsors intend to focus on “retirement planning education” in 2022, up from 48% this year. Meanwhile, more than half of workers considering a job change say they would roll over their current retirement plan to an IRA or to their new employer’s retirement plan.
Desire for Savings Contrasted With Higher Spending
The survey showed a sharp decline in economic optimism among consumers, a contrast to the first half of 2021. In the third quarter, economic optimism for the next 12 months among workers dropped to 18% from a high of 32% in the second quarter—the strongest sentiment since surveying began in Q3 2020. Meanwhile, retiree optimism fell to 17% from a high of 34%.
The declines come as consumers face rising prices from inflation. Both workers and retirees noted increased spending on areas including groceries (79% for workers; 85% for retirees), gasoline (75% for workers; 74% for retirees), home repairs (52% for workers; 42% for retirees) and dining out (49% for workers; 52% for retirees). According to the survey, people are also holding off on spending on home repairs, travel, and purchasing a vehicle.
“It is a confusing time for many consumers. On the one hand, we seem to be managing through the pandemic with success. There is work for many people who are looking for it. The stock markets continue to show strength, which in turn helps bolster retirement savings,” Reddy says “On the other hand, inflation is cutting into everyday expenses and—as the survey shows—impacting both workers and retirees. Meanwhile, the real-life impact of supply chain issues has people on edge. In that sense, we were not surprised to see the dip in optimism from earlier this year. It will be interesting to see how spending goes during the holiday shopping season. If people can spend enough without overdoing it, we should be able to maintain a balance of strong consumer spending while keeping retirement savings intact.”
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