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Despite challenges during the pandemic, employees remained committed to saving for retirement and future health care costs

Publish date: 20 May 2021
New report examines saving and investing trends, and gender differences, among employees participating in workplace financial benefit plans administered by Bank of America.
Bank of America today announced insights from its 2021 Financial Life Benefits Impact Report, which reveal that despite what was a challenging year financially for many Americans, the vast majority of current retirement plan participants remained committed to saving for the future. Last year, nearly 60% of employees participated in their workplace retirement plan – consistent with pre-pandemic participation rates in 2019. Among employers who use the auto enroll feature within their 401(k) plan, plan participation jumps to 86%.

“Over the last year, employees across various industries continued to make progress toward their financial goals in the face of unprecedented challenges,” said Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America. “At Bank of America, we’ve been inspired by the resiliency of employees and employers alike, and proud of the work we’ve done together to help employees continue preparing for retirement and to be more successful in their daily financial lives.”

The Financial Life Benefits Impact Report explores employee usage and engagement with workplace financial benefit programs and solutions, including for retirement, health savings, equity compensation and overall financial wellness. Insights revealed are as of December 31, 2020, and are based on more than 3 million participants in 401(k) plans administered by Bank of America.

Retirement saving trends during the pandemic. Despite challenges for many, only 10% of 401(k) plan participants took a hardship distribution made possible by the CARES Act, at an average amount of less than $18,000 per participant. CARES Act distributions outpaced standard hardship distributions 10-to-1, and just 17% of participants took a loan against their retirement plan assets, consistent with 2019 rates.

Employees taking control of health savings. Average balances in Health Savings Accounts (HSA) increased 17% in 2020, with employee contributions jumping 10%. Bank of America HSA participants have an average balance of approximately $3,400 – 25% higher than the national average. Also, 35% of HSA balances were saved for future use, which is 25% higher than the national average; and 38% of assets held in Bank of America HSAs are invested in the markets for potential future growth, which is 30% higher than the national average. Men seem to be outpacing women on planning for future healthcare costs, with 74% more men having an HSA than women, and with an average account balance 49% higher than women. This is especially troubling given women are likely to face higher healthcare costs in retirement due to living longer than men.

Gender gaps in financial wellness and saving for retirement. On average, women’s financial wellness scores – a figure calculated based on responses to questions and underlying calculations considering financial information and behaviors – are 13% lower than men’s (58 vs. 67). In addition, women are less likely to participate in their workplace retirement plan (55% take part compared to 61% of men) and lag men in average retirement plan balances ($62,000 for women vs. $98,000 for men). Women also have a lower retirement contribution rate of 6.2% compared to 6.8% for men.

Digital engagement continues to increase dramatically. The past year has also accelerated the pace of digital engagement. Digital logins to Bank of America’s Benefits OnLine® increased 31%, from 2019 to 2020, and mobile app usage was up 87% over the same time period. In addition, more than 25% of participants who have a broader financial relationship with Bank of America have now digitally linked their financial benefit accounts for a broader view of their financial lives online and within the mobile app.

Sustainable investment options gaining popularity. 401(k) plans offering investments with an environmental, social or governance (ESG) profile grew nearly 10% in 2020. When offered within their employer’s retirement plan, 10% of employees invest in these funds – among which 60% are Millennials.

“The future of workplace benefits needs to combine highly personalized solutions with a seamless, digital experience – allowing plan sponsors to provide relevant guidance and meet employees right where they are,” said John Quinn, Managing Director, Head of Institutional Retirement Products and Platforms at Bank of America. “At Bank of America, our goal is to partner with employers to provide wellness programs that address the diverse needs of their workforce and help employees be financially successful today and in the future.”

Download the 2021 Financial Life Benefits Impact Report on Bank of America's website