More than two-thirds of U.S. employers say their workers are postponing retirement, according to new survey data that underscores the lingering financial strain on households even as the Federal Reserve's rate-cutting cycle enters its second year.
The Principal Financial Well-Being Index, released Tuesday, found that 69% of business owners and decision-makers at companies ranging from two to 10,000 employees report employees delaying retirement. Among those employers, 71% cite rising costs of living and inflation as the primary reason.
"The path to retirement is personal, but confidence is a universal need," said Teresa Hassara, senior vice president of Workplace Savings and Retirement Solutions at Principal Financial Group in Des Moines, Iowa. "People want to understand where they stand today and what they can do next."
The findings carry practical consequences for independent financial advisors and wealth management professionals who work closely with clients navigating retirement timelines. When workers stay in the workforce longer, whether by financial necessity or shifting preference, it compresses the planning window and often requires advisors to recalibrate withdrawal strategies, Social Security timing, and portfolio drawdown sequences. For advisors, this trend may also intersect with broader industry challenges, such as filling advisor ranks as retirements loom.
Employer confidence rebounds
Despite the retirement delay data, employer confidence showed a notable uptick. The index's overall sentiment score rose to 6.55 out of 10 in the third wave of the survey, up from 6.06 in March 2026. Economic outlook improved nine points, perception of the broader U.S. economy rose seven points, and assessments of local economic conditions climbed six points.
On the labor front, 52% of employers reported adding staff over the prior three months, compared with 38% who reported no change and 12% who saw headcount decline. Of those that did cut staff, 56% said the departures were employee-initiated, suggesting voluntary attrition rather than restructuring remains the dominant driver of workforce movement.
AI's emerging role in hiring and wages
The survey also probed employer attitudes toward artificial intelligence, a topic that has generated considerable anxiety but appears to be landing differently in practice. Only 1.4% of businesses attributed recent staffing reductions to AI or automation, according to the Principal data.
"Much of the public conversation around AI has focused on potential job losses, but employers are telling a more nuanced story," said Amy Friedrich, president of Benefits and Protection at Principal Financial Group.
Looking ahead, 31% of employers expect AI adoption to increase both staffing levels and wages over the next 12 to 24 months, while 24% anticipate wage gains with stable headcount. Just 4% expect AI to drive declines in both staffing and wages.
Perhaps most telling: the share of businesses that say AI is not applicable to their operations has dropped to 10%, down from 19% a year earlier, a sign that AI is becoming embedded in mainstream business planning rather than remaining a niche concern. Advisors who counsel small business owner clients should take note, as this shift may affect both succession planning and the valuation of closely held enterprises. For those advising on retirement plan services, the evolving landscape may also prompt a review of fiduciary services for provider searches.
Implications for retirement planning
For financial planners working with clients in or near retirement, delayed workforce exit dates are not simply a human resources phenomenon; they reshape income projections, Medicare enrollment windows, and the sequencing of required minimum distributions under current IRS rules. Advisors may also need to address the psychological side of retirement readiness, as many workers plan to hoard savings, undermining spending readiness.
At the same time, the broader improvement in employer sentiment could prove to be an early indicator that consumer confidence and, with it, retirement confidence, may follow. As the labor market evolves, advisors should watch for shifts in workforce demographics and their impact on retirement plan design and wealth platforms aimed at retaining retiring public workers.
