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2021 Employee Financial Wellbeing and Defined Contribution Survey Report

Building a Financially Resilient Workforce

The COVID-19 pandemic and its aftermath have caused a reckoning of sorts for many employers. As the labor market tightens, companies are grappling with how to recruit and retain top talent in an environment in which employees have the upper hand for the first time in decades. At the same time, a workforce spanning five generations has a wide range of wants and needs when it comes to financial wellbeing. Knowing this, employers are striving to meet employees where they are.

Aon’s Defined Contribution and Financial Wellbeing Survey provides a glimpse into American employees’ current financial wellbeing and their expectations for retirement. There is good news in this year’s survey. Despite the global pandemic, financial attitudes remain strong; in fact, they have improved slightly from 2018, when we last conducted this survey. The findings show promise for employers, who can provide benefit programs, plan designs and features that not only enhance personal financial wellbeing for employees but also collectively build a more financially resilient workforce.

To read the full survey report, download the PDF here.


About the 2021 Employee Financial Wellbeing and Defined Contribution Survey Report

Aon conducted a nationwide survey of more than 1,000 full-time U.S. employees during early 2021. The focus of this survey was to understand the real-life challenges of managing day-to-day finances while saving for the future. Similar to the initial survey conducted in summer 2018, this survey was limited to employees who have access to a defined contribution (DC) plan through their employer.


Uncovering Mindsets and Needs

Employees’ attitudes toward their current financial wellbeing remain relatively stable despite the global pandemic. 


Money Matters

Most employees remain positive about their finances. Overall, men feel more confident about managing money compared with women. In contrast, a majority of women find money matters stressful and overwhelming and they are more likely than men to feel that they are “just getting by.” This difference was also seen in 2018, but it is larger this year potentially reflecting the disproportionate impact the pandemic has had on women in the workforce.

Both physical and emotional wellbeing are connected to individual finances. Overall, 37 percent of employees acknowledged that their finances have negatively impacted their emotional wellbeing, and 32 percent have put off medical procedures due to their financial situation. Nearly one in four (24 percent) say their finances prevent them from healthy eating.

These percentages are significantly higher for women than men and were also higher for those who reported a direct financial impact from the COVID-19 crisis, such as lost employment, reduced hours or a reduction in salary. The links between financial situation and emotional and physical health may have long-term ramifications. For instance, untreated conditions can lead to higher medical costs. Employees may not be in a position to cover those higher costs, leading to a vicious cycle.


Targeting Employer Support

When it comes to financial needs, many naturally look to their employer for support.

Beyond commonly provided benefits such as retirement and health benefits, employees are looking for support obtaining retirement income, accessing financial education and planning, and achieving non-retirement savings goals. Younger employees are seeking help to save for education and buy a home, while higher savers would like more support with tax and estate planning.

Early-career employees are the most interested in receiving employer support on a variety of financial wellbeing topics, offering employers a chance to better understand these employees' needs and target their offerings for this segment of the workforce. By delving deeper, companies may be able to learn, for example, that student loan debt is preventing these employees from saving for retirement, and then offer ideas to help them balance and achieve both objectives.


Getting Personal

Employees have clear preferences when it comes to how they would like to receive financial support from their employers. In general, they fall into three categories:

When considering how employees want to learn about financial topics, on-demand resources win out over real-time education. As increasing numbers of retirement and learning programs go digital, now is the time for employers to rethink how they provide support and broaden access to all members of their workforce.


Daily Demands

While a vast majority of workers try to save money every month, day-to-day challenges get in the way of longer-term savings.


Roadblocks to Saving

While most employees try to save money each month, the reality is many American workers have trouble saving enough. Many can’t afford to save more or struggle to balance savings with other family and financial commitments. Only three out of 10 employees say there is nothing preventing them from saving more.

Employees also cite more nuanced roadblocks that may be easier to address — such as not knowing who to talk to or where to get information, not having the time to focus and not trusting the available information. Employers have an opportunity to address these relatively low barriers by providing financial information resources through a trusted source (their employer).


Demands of Debt

Debt remains a significant issue for U.S. workers. Four in 10 employees say that outstanding debt makes it hard for them to save for retirement.

Outside of home mortgages, credit card debt remains the most prevalent: 42 percent of employees carry credit card debt month to month, down from 48 percent three years ago. One quarter of high savers (those who save at least 10 percent in their retirement program) also carry credit card debt. This suggests that employers can do more to help their employees prioritize savings and debt: It may be more financially beneficial to pay off debt before saving for retirement, or to save only up to the employer match level (usually less than 10 percent) while paying off credit card debt.


The Load of Student Loans

Nearly one-third of employees have outstanding student loan debt. Unsurprisingly, this form of debt is most common among early-career employees. As might be expected, over half of those with student loans also said they were not able to save for retirement.


Ending Up With Enough

Employees continue to rely on employer retirement plan designs to guide their savings and investment decisions.

Plan design influences employee savings behaviors:


A Balancing Act

Most employees are saving for both long- and short-term goals. With so many competing financial priorities, it may no longer be enough to simply help employees understand their retirement readiness. Employees are looking for more guidance to help balance their savings goals.


Sticking With the Plan

The majority of employees believe their employer’s plan is equal to or better than similar plans offered by other employers in their industry. Satisfaction is even higher for older employees.

Employees’ savings and investment decisions are strongly influenced by their employers’ retirement plans. Nearly one-third of employees who are saving for retirement said they save 5 to 7 percent for retirement, which is the typical level required to reach the full employer match. While Aon’s analysis on retirement income adequacy shows that most employees need to save at least 10 percent to prepare for a comfortable retirement, only 22 percent of employees report saving more than 10 percent.


Acting on Investments

Most employees are satisfied with the available investment options in their retirement plans. Those who aren’t satisfied are split on what they don’t like. Early-career employees think there are too many investment options, while late-career employees think there are not enough.

While most employees still want simple options designed by professionals, many want their investments to reflect their values as well. Nearly two out of three respondents said that investing in socially conscious companies is important to them. This focus on environmental, social and governance (ESG) criteria was especially important to early-career and low-paid employees.

Still, half of employees say they use the plan default, such as target date fund or a single balanced fund, when choosing investments. About one-fifth of employees report that they actively manage their retirement investments — with men, late-career, higher-paid and higher-saver employees more likely to do so.


The Road to and Through Retirement

Employees anticipate a more gradual transition to retirement, and most would like some form of guaranteed income through their retirement years.


Shifting Timelines

Employees are expecting a more gradual transition to retirement. The age at which they expect to leave full-time work is inching up; it is now 64.1, up from 63.5 in 2018.

The biggest impediment to retiring — and a common factor in the gap between expected and actual retirement age — is often health problems or disabilities. One-third of retirees who retired earlier than expected experienced this type of hardship, according to data from the Employee Benefit Research Institute.[2] Sixty percent of employees also worry about running out of money during retirement.


Getting Through Retirement

Regardless of expected retirement age, most employees express a desire for guaranteed income during retirement. However, there is no clear consensus on how much control employees prefer to have over their investments. Interestingly, early-career employees are more likely to want all guaranteed income than their late-career counterparts. High-income individuals and men are also more likely to seek greater control over their investments.


As organizations reimagine their workforce strategies in the wake of the COVID-19 pandemic, companies must listen closely to the diverse and evolving financial needs of their employees — from managing day-to-day financial challenges to preparing for retirement. By providing targeted benefit programs and thoughtfully designed retirement plans, organizations can take positive steps toward building a more resilient workforce.

To read the full survey report, download the PDF here.

[1] Aon’s 2021 Benefit SpecSelect™ database, reflecting benefits offered to salaried employees at large employers.

[2] Employee Benefits Research Institute and Greenwald Research 2021 Retirement Confidence Survey