Despite Challenges During the Pandemic, Employees Remained Committed to Saving for Retirement and Future Health Care Costs

May 19, 2021 at 9:00 AM Eastern

Bank of America today announced insights from its 2021 Financial Life Benefits Impact Report(PDF), 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%1.

“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.”

Bank of America’s Retirement & Personal Wealth Solutions organization serves more than 26,000 companies of all sizes and more than 5.7 million employees as of 12/31/202. Bank of America offers institutional client employees a range of financial benefit programs and solutions to help them pursue their financial future. Last year, the company launched Financial Life Benefits®, a comprehensive suite of workplace benefits and solutions bringing together traditional financial benefits – including retirement, health savings, equity compensation and non-qualified deferred compensation plans – with a corporate employee banking3 and investing4 offering that can help address employees’ everyday needs. Bank of America works with employers to deliver its Employee Banking and Investing (EBI) program, a packaged offering of services for everyday banking and investing needs, combined with exclusive rewards, financial education and dedicated support. The number of companies offering EBI doubled in 20205.

Financial Wellness at Bank of America

At Bank of America, we know that supporting the physical, financial and emotional wellbeing of our employees in their personal life also supports them in their work life — so they can be the best at work and at home. When it comes to financial wellness, we believe that the more informed people are about their money, the clearer their financial outlook can be. This applies not just to our clients, but to our employees, as well. This is why we offer robust financial offerings to our employees that focus on driving better behaviors across life priorities and the financial spectrum — budgeting, planning, saving, investing and more. Our competitive financial benefits – including 401(k) contribution matches, retirement advice6, health savings accounts7, educational resources and financial wellness tools – help employees address money issues in the here-and-now, prepare for retirement and help protect their family over the long term.

Bank of America

Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 66 million consumer and small business clients with approximately 4,300 retail financial centers, including approximately 2,900 lending centers, 2,500 financial centers with a Consumer Investment Financial Solutions Advisor and approximately 2,300 business centers; approximately 17,000 ATMs; and award-winning digital banking with approximately 39 million active users, including approximately 31 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

For more Bank of America news, including dividend announcements and other important information, visit the visit the Bank of America newsroom and register for news email alerts.

Bank of America is a marketing name for the Retirement Services business of Bank of America Corporation (“BofA Corp.”). Banking activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., member FDIC. Brokerage and Investment advisory services are provided by wholly owned non-bank affiliates of BofA Corp., including MLPF&S, a dually registered broker-dealer and investment adviser and member SIPC.

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1 The Financial Life Benefits Impact Report is based off Bank of America’s proprietary 401(k) business, which comprises of $251 billion in total client assets and 3.1 million total participants with positive balances as of December 31, 2020.

2 Source: Global Wealth and Investment Management Finance.

3 Bank products are available from Bank of America, N.A., and affiliated banks.

4 Investment products are available from Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”).

5 Bank of America Employee Banking & Investing Program, 2020.

6 Investment advice on 401(k) assets is only provided to plan participants through certain investment advisory programs as directed by plan sponsors.

7 Made available through Bank of America, N.A.