Retirement income anxiety: Workers expect employers to help

The longevity gap HR leaders need to understand

Part of what makes the retirement anxiety in this survey so consequential for employers is that it is grounded in a real miscalculation — one that affects how employees think about their financial futures and, in turn, how they engage with the retirement benefits HR teams put in front of them.

Workers tend to anchor on average life expectancy at birth — roughly 78 averaged across males and females — without accounting for what reaching retirement age actually does to those odds. A 65-year-old has already survived the events that pull down population averages. Their true planning horizon is considerably longer.

“You get to 65, you survived any other major healthcare issues or disasters, and now your longevity is not 78 — it’s more akin to like 87 or 88,” Pitney said. “And then for a couple, for one to survive, it’s into the 90s, 94, 95 or so.”

For HR leaders, that recalibration has two practical implications. First, retirement plans that treat age 65 as a finish line — delivering employees a lump sum and wishing them well — are structurally misaligned with how long those retirements will actually last. Second, employees who underestimate their own longevity are likely to underestimate how much they need to save, and may arrive at retirement financially underprepared — a workforce wellbeing and reputational issue for employers who care about outcomes beyond the working years.

“Plan sponsors are getting a little more paternalistic than maybe they had before, providing more income solutions and a landing spot for people that want to stay within the retirement plan,” Pitney said. “For years, we’ve been talking about this concept of a retirement tier built in as a plan design mechanism — and what that means is having that landing spot, to give people a reason to stay in the retirement plan.”