The retirement readiness gap: Why benefit managers must act

• Key Insight: Learn how employer-driven financial education directly influences retirement contributions and long-term security.
• What's at Stake: Rising financial stress risks lower retirement savings, reduced productivity, healthcare cost increases.
• Supporting Data: Only 29% feel hopeful about their financial future, down from 60% in 2024.
• Source: Bullets generated by AI with editorial review

Retirement readiness is rapidly emerging as one of the most urgent priorities for employers and their people, according to new data from financial wellness platform nudge.  

Their 2025 Global Financial Wellbeing Report highlights just how challenging the environment has become: Only 29% of people feel hopeful about their financial future, down sharply from 60% in 2024. At the same time, more than 56% worry about inflation and 30% are concerned about housing affordability, leaving many employees unsure if they can save enough to retire securely.

Financial stress isn't just about today's bills — it has a profound effect on employees' long-term planning. A LearnLux survey revealed that 88% of employees experience financial stress, and many are cutting back on savings for both emergencies and retirement to cope with current economic pressures. This means workers are entering midlife and beyond without adequate retirement funds, creating anxiety that spills over into their health, productivity, and overall well-being.

"Employers have an enormous opportunity, and responsibility, to help close this gap," Jeff Miller, vice president U.S. at nudge, said in a release. "This starts with holistic, personalized financial education that addresses both immediate concerns, and short-term and long-term goals. It's not just about saving more; it's about understanding how retirement planning fits into a broader financial plan."

Read more: Here's how much employees need to save for healthcare in retirement

The role of financial literacy in retirement planning

Employees with strong financial literacy are five times more likely to feel confident navigating financial changes, according to the nudge report. Confidence in financial decision-making is a cornerstone of retirement readiness, influencing whether employees contribute consistently to retirement plans, understand employer matching or make sound investment choices.

Conversely, employees with low financial literacy are more likely to under-save, rely on risky financial strategies, or withdraw early from retirement accounts. Combined with the tendency to reduce contributions during times of financial stress, these behaviors create long-term risks that can undermine retirement security.

Read more: Employees feel bleak about their financial futures, despite robust benefits

Benefit managers are uniquely positioned to help employees prepare for retirement, but success requires a holistic approach. Expanding education is key — providing clear, accessible resources on retirement planning, investment strategies, and the power of compound growth can give employees the knowledge they need to make informed choices. 

"Employers play a crucial role in supporting financial wellness by educating employees on their 401(k) plans," Miller said. "The goal is to make retirement planning part of everyday financial decision-making, not an afterthought."

Pairing education with personalized guidance can make an even bigger impact. Access to one-on-one financial coaching helps employees translate general advice into actionable steps that reflect their personal circumstances, from paying down debt while saving for retirement to selecting appropriate investment options.

Read more: Employees are turning 65 with no plans to retire: What this means for benefits

Clear communication about benefits is equally important. Many employees fail to maximize retirement plans simply because the information feels complex or overwhelming. Simplifying language, sending timely reminders and using behavioral nudges such as auto-enrollment and auto-escalation can dramatically increase participation and contribution rates.

Finally, retirement readiness should be positioned as part of a broader well-being strategy. When financial health is discussed openly alongside physical and mental wellness, employees are more likely to engage with retirement planning and view it as a normal, supported part of their work life. Reducing stigma around financial concerns and highlighting leadership support can further encourage action.

"No one ever says, 'I saved too much for retirement,'" Miller said. "Retirement planning isn't just a personal responsibility, it's a partnership. Employers who support their people today are building a more financially confident, productive and loyal workforce for tomorrow."