New report reveals employees are underprepared for retirement and healthcare costs
The gap between employees’ emotional optimism about retirement and their actual financial readiness is proving to be a challenging one to close.
A quarterly report from IRALOGIX highlights a growing disconnect and dissatisfaction around financial well-being and economic stability: 43% of Americans report declining confidence in the economy and 71% fear inflation will erode their savings. However, few are taking concrete steps or precautions to strengthen their financial future.
“People are feeling the pressure from market ups and downs and an uncertain economy, but too many aren’t taking the steps needed to strengthen their plans,” Peter de Silva, CEO of IRALOGIX, said in a release.
Where Americans are falling short with their financial wellness
The weakest area in this quarter’s index was the healthcare readiness category, with Americans achieving just 36.7% of their potential in this category — a notable drop from 42.1% last quarter. Most respondents lack a plan to manage healthcare costs in retirement, from long-term care to surprise medical bills, leaving them exposed to financial shocks. Additionally, confidence in Medicare’s ability to meet future needs remains low, and many fear financial ruin due to chronic illness or elder care expenses.
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Elsewhere in the index, the economic and policy confidence measurement also declined significantly, dropping to 42.0%. Persistent inflation, concerns about Social Security, market volatility and policy uncertainty continue to shake employees’ confidence in the future. While some Americans are using tax-advantaged retirement accounts, many are not taking full advantage of the tools available to protect themselves against rising costs.
Despite a more stable market environment, many Americans are still not saving enough, don’t have a written retirement plan, and aren’t working with financial advisers to develop a long-term strategy, IRALOGIX’s data found. Inflation is also making it harder for workers to increase contributions, even if they intend to. Tools like automatic escalation, IRA funding and catch-up contributions can make a difference, but greater participation and awareness are needed.
Room for growth
According to the index, many Americans feel mentally prepared for retirement, citing strong social connections, hobbies and a sense of purpose. However, this emotional optimism hasn’t always translated into financial readiness. Many individuals still haven’t had important conversations with their families about retirement or mapped out how they’ll handle the transition — which could cause stress down the road.
“The IRRI makes it clear that while many Americans feel ready for retirement emotionally, they aren’t financially prepared where it counts,” de Silva said. “It’s troubling to see declines in healthcare planning and confidence in the policy environment. Pre-retirees can’t afford to ignore these gaps. This is where employers and advisers can step up to help people turn good intentions into real plans.”
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How employers can bridge the gap
The IRRI reveals a critical opportunity for employers to step in and support their employees’ financial wellness. By enhancing benefit offerings and increasing access to retirement education, employers can help workers turn concern into action and build long-term security.
One of the most effective strategies is to offer access to certified financial planners as a workplace benefit. Personalized guidance can help employees create written retirement plans, understand their savings goals, and optimize their decisions around Social Security. These services can demystify retirement planning and encourage employees to take tangible steps toward readiness.
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Employers can also pair high-deductible health plans with HSAs, contribute to these accounts, and educate employees about how HSAs can be used tax-free to cover healthcare costs during retirement. Given the ongoing weaknesses in healthcare readiness, this tool is both practical and underutilized.
Employers can also make a big impact by encouraging the use of automatic escalation features and catch-up contributions within retirement plans. These mechanisms help employees steadily increase their savings over time, especially those over 50 who are eligible for additional contributions. Providing regular updates and reminders around contribution limits can boost engagement.
As Americans face inflation, policy uncertainty, and rising healthcare costs, many remain unsure of how to protect their retirement future. Employers are uniquely positioned to close this gap. By offering thoughtful, targeted financial wellness benefits and education, they can empower their employees to move from worry to action — and from insecurity to retirement confidence.
“Now is the time to act if Americans want to move from just getting by to building a secure retirement,” de Silva said.