53% of Workers are Betting on a Myth, and it's Hitting Your P&L

The Social Security Myth Is a Workforce Risk CFOs and HR Leaders Can’t Ignore

Financial stress doesn’t clock out when employees clock in. And one of the biggest drivers of that stress is a widespread misunderstanding of Social Security and what it will actually provide in retirement.

More than 53% of workers believe Social Security will be a major source of their retirement income, and 21% believe it will be all they need. The reality is far different: Social Security replaces only about 40% of the average worker’s pre-retirement wages at full retirement age. That gap between expectation and reality isn’t theoretical. It shows up every day in distraction, turnover, and reduced productivity.

For CFOs and Directors of HR, this isn’t a personal finance issue. It’s a human capital risk.

The Education Gap Driving Financial Anxiety at Work
Many employees are trying to make long-term financial decisions with incomplete or flat-out incorrect information. Most have a vague awareness of Social Security but little understanding of how it actually works or how it fits into a broader retirement strategy.

When employees assume Social Security will “cover it,” several things happen:

• They under-save in their 20s, 30s, and 40s, missing the most powerful years of compounding.
• They delay or ignore HSAs and retirement plans, believing they can “catch up later.”
• Uncertainty becomes a constant mental background noise that follows them into the workplace every day.

That anxiety doesn’t stay abstract. It affects focus, decision-making, and engagement, especially among hourly and frontline employees who have less financial margin for error.

Misconceptions That Quietly Undermine Smart Planning
The Social Security misunderstanding goes deeper than benefit amounts:

• Many employees still believe full benefits begin at age 65, even though full retirement age now falls between 66 and 67, depending on birth year.
• Others hear that “delaying is always better,” but admit they don’t know the right claiming age for their own situation.
• The result is indecision, second-guessing, and stress often paired with no concrete plan at all.

A financially uncertain workforce is a distracted one. 

Why Compounding—and Education About It—Matters to Employers
Compounding is where financial education becomes a business tool. Small, consistent contributions made early, especially through HSAs and retirement plans, can dramatically reduce future financial pressure on employees.

HSAs, in particular, are often misunderstood:

• Contributions are pre-tax
• Growth is tax-free
• Withdrawals for medical expenses are tax-free
• After age 65, non-medical withdrawals are taxed like a traditional IRA

For younger employees with lower healthcare costs today, HSAs can function as one of the most efficient long-term savings vehicles available, if they understand it early enough to act.  

The Cost of Waiting: A Simple Example

Consider the impact of time:

• Contributing $1,000 per year to an HSA (about $20 per week) starting at age 25 can grow to ~$209,000 by age 65 (assuming a 6% return).
• Starting at age 35? That same contribution grows to ~$102,000.
• That’s a $107,000 difference from the same weekly amount.
• Keeping that $20/week in a paycheck for 10 years adds up to about $10,400 total.

Time compounds. Paychecks don't. 

When employees believe Social Security will make up the difference, they never run these numbers, and the cost shows up later in stress, delayed retirement, and higher turnover.

Financial Stress Shows Up on Your P&L
From an employer’s perspective, financial insecurity creates measurable risk. Employees under chronic financial strain are more likely to:

• Miss work to manage personal financial issues or side jobs
• Be distracted on the job, increasing errors, safety incidents, and lower output
• Leave for marginally higher pay simply to relieve immediate pressure

When a majority of workers worry whether Social Security will even be there throughout retirement, financial anxiety becomes a chronic condition.  That anxiety fuels burnout, disengagement, and churn; costs that rarely show up neatly on a benefits spreadsheet but hit hard operationally.

Turning Financial Education into a Retention Strategy
Organizations that address this head-on gain an advantage. Practical, targeted education can:

• Correct unrealistic expectations about Social Security
• Show employees how much income it typically replaces, and how much it doesn’t
• Demonstrate, in real dollars, how HSAs and retirement plans can close the gap
• Reinforce that starting earlier, even with small amounts, matters more than “catching up” later

When employees feel informed and in control, stress declines. Focus improves. Loyalty increases.

In a labor market where retention and productivity are constant pressures, helping employees build a realistic financial plan isn't just good benefits communication, it's a strategic investment in workplace stability and performance.

Contact Koppinger & Associates to turn financial confusion into clarity, and employee anxiety into engagement.

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