Inflation, though it has cooled somewhat since its peak in 2022, continues to cast a looming shadow over the dreams and financial well-being of employees’ retirement plans. As we navigate these turbulent times, it’s crucial for employers to take proactive steps and provide retirement solutions that effectively shield their workforce from the impact of inflation.

The Ongoing Challenge of Inflation

According to Charles Schwab’s survey, 62% of employees now perceive inflation as a formidable barrier to achieving retirement security—an alarming increase from the 45% recorded in 2022. During the height of inflation, 41% of employees were forced to halt their retirement contributions, and approximately one-third had to dip into their retirement funds to cover immediate expenses, as reported by Society for Human Resource Management (SHRM). These unplanned withdrawals can lead to significant tax liabilities and penalties, especially for those under the age of 59 1/2.

While year-over-year inflation rates have decreased from a staggering 9.1% to around 3%, the prolonged period of rising costs continues to weigh heavily on employees. With more than two-thirds of them feeling that their salaries are not keeping pace with the cost of living, financial wellness has reached a record low, according to Bank of America. Consequently, many employees are delaying retirement planning to address short-term needs like credit card debt, unforeseen expenses, and caregiving costs. In fact, over 35% of employees are now planning to postpone their retirement due to the persistent specter of inflation.

Opportunity for Employers

Here’s the silver lining for employers amidst this daunting challenge. Employees are becoming increasingly conscious of their retirement plans and are placing more value on retirement benefits. The data from SHRM paints a compelling picture:

  • 88% of employees view a 401(k) plan as a non-negotiable requirement when considering potential employers.
  • A staggering 75% would turn down a job offer that doesn’t include a 401(k) plan.

71% believe that a robust retirement plan enhances their commitment to stay with an employer.

Retirement Benefits Solutions

Let’s explore the solutions that employers can implement to counteract the negative effects of inflation on their employees’ retirement readiness:


Strengthen Retirement Plans for Your Workforce


Collaborate with your benefits adviser to identify gaps in retirement readiness among your employees. Explore options such as automatic enrollment, contribution escalation, retirement account consolidation, and lifetime income choices to address these challenges effectively.


Empower with Digital Tools


Provide your employees with state-of-the-art digital tools that connect them to retirement education, financial planning, and information on retirement income streams. This empowers them to make well-informed decisions about their financial future, even in the face of inflation.


Comprehensive Financial Education


Enhance your financial education programming to cover all stages of employees’ careers. Include essential information on Social Security and Medicare as part of retirement planning, as many employees lack knowledge in these areas. Knowledge is power, and well-informed employees are better equipped to tackle the challenges of inflation.


Build Emergency Safety Nets


Help your employees establish emergency savings accounts to serve as a financial safety net. These accounts can prevent them from having to withdraw funds from their retirement accounts during unforeseen financial crises, preserving their retirement security.


Offer Educational Programming


Employees are actively seeking guidance on financial and retirement basics. Connect your employees with trusted financial professionals who can provide personalized planning and advice tailored to their unique financial situations.


Explore Your Options with Hotaling Insurance Services


While inflation remains a formidable obstacle to retirement security, employers have a unique opportunity to make a positive impact. By providing comprehensive retirement benefits and financial education, you not only help your employees navigate these turbulent times but also strengthen your organization’s standing in the eyes of both current and potential talent.


Preparing your employees to tackle inflation and other retirement challenges is essential for their financial well-being and your organization’s success. Don’t hesitate to take the first step. Contact Hotaling Insurance Services today and let our experienced employee benefit professionals assist you in examining plan design options, enhancing retirement education, and implementing financial tools to bolster your efforts. Together, we can build a more secure retirement future for all.

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