Retirement confidence rebounds

Two-thirds of American workers say they feel confident they will have enough money to retire comfortably, according to the Employee Benefit Research Institute’s (EBRI) 2018 Retirement Confidence Survey. Not only is this an increase over the previous year, but it nearly emulates confidence levels not seen since before the 2008 financial crisis. This optimism is related to participation in a retirement plan—workers who participate in a defined contribution (DC), defined benefit (DB) or an individual retirement account (IRA) reported higher confidence levels. Not surprisingly, people who have higher debt report lower confidence in their ability to afford a comfortable retirement.1

While people are more optimistic about their ability to afford basic expenses in retirement, nearly half fear they won’t be able to afford health care expenses in retirement.1 Their concern is justified: a 65-year-old couple today would need $296,000 just to pay for out-of-pocket health care expenses in retirement.2 That amount can quickly erode an individual’s assets if they aren’t financially prepared. Yet people don’t appear to be connecting health care expenses with their retirement planning, holistically. The 2018 Workplace Benefits Report by Bank of America found only 7% of employees identified health care as an important building block of financial wellness.

An overall retirement strategy should include a plan to address health care expenses through retirement. Health savings accounts (HSAs) can play an important role in helping people afford these expenses today and into retirement, but they are often an overlooked opportunity. Providing ongoing educational resources that use simple, easy-to-understand language is critical to helping drive awareness and optimization of HSAs. And it becomes more impactful when paired with retirement plan education to help employees better prepare for a healthy retirement overall.

Key takeaways

Continue to drive higher employee participation and contribution rates to your company’s retirement plan.

Consider automatic enrollment and automatic increase to help move employees toward their retirement goals.

Offer an HSA with a high deductible health plan to give employees a tax-advantaged way to afford health care expenses today while building their accounts to draw on in retirement.

Pair education and awareness of 401(k) and HSAs for greater impact and understanding of how these accounts can work together in retirement.

Leverage the educational resources we make available—on-site workshops, one-on-one consultations, online seminars and other content—to help address employees' specific needs and keep them on track with their goals.

1 Employee Benefit Research Institute’s 2018 Retirement Confidence Survey.

2 Employee Benefit Research Institute, October 2018.