Despite a solid economy and a jobless rate at a 49-year low, more employees than ever admitting to being stressed about their finances, according to PwC’s 8th annual Employee Financial Wellness Survey.
When asked what they feel causes them the most stress, more employees—59% in 2019 compared to 40% in 2018—cite financial matters than any other life stressor combined.
So what’s driving employee financial stress? Once again, cash flow and debt challenges continue to plague employees, inhibiting their ability to save sufficiently. As a result, many find themselves stressed about being able to meet even a rather small unexpected expense—which once again was cited as a top financial concern.
Indeed, 45% of employees overall said they have less than $1,000 saved for unexpected expenses. Just over half (51%) of women have less than $1,000 for unexpected expenses vs. 38% of men.
Debt also continues to be a key concern, as more employees are carrying balances on their credit cards, in addition to many still burdened with student debt. “As a result, we believe that employee anxiety will continue to mount without a greater emphasis on increasing savings and improving longer-term financial well-being,” the report states.
On the retirement front, stressed employees show signs of being far less prepared. They have saved less, are more likely to raid retirement plans before retirement, and are nearly three times as likely to say they expect to spend the majority of their time working in retirement because they’ll need to financially.
“We foresee critical issues for organizations if the root causes of this financial stress are not addressed,” the report says. “While some studies show that upwards of 80% of employers report having a financial wellness program in place, our results show that a majority are still traditional retirement education and planning programs lacking focus on the key areas causing employee stress. As a result, a failure to address some of the more immediate financial concerns may actually undermine efforts to better prepare employees for retirement.”
The new retirement
More than 80% of today’s employees believe they will be working in some capacity during retirement. One-third of employees expect to work in retirement because they will need to financially. These emerging trends will likely change the definition of retirement as we know it, leading to longer periods of employment and a more gradual transition into retirement. The implications of the changing face of retirement and the factors fueling it are areas of particular interest for us to research further.
The report says half of all Baby Boomers are planning to postpone retirement, largely because they haven’t saved enough and because of growing concerns around healthcare costs in retirement.
Even among Boomers planning to retire within the next five years, only 43% know how much income they will need in retirement. The absence of a solid plan for retirement not only raises stress levels but also may make it more difficult to achieve financial stability in retirement, which may be fueling the growing number of bankruptcy claims among retirees. These results seem to be an indictment of current retirement education programs and may require employers to rethink their approach to preparing employees for retirement.
More findings from the study
- The number of employees stressed about their finances increased across all generations, particularly among Millennials. 71% of Millennials say that their stress level related to financial issues has increased over the last 12 months.
- 35% of employees report that issues with personal finances have been a distraction at work. Nearly half (49%) of those who are distracted by their finances at work spend three hours or more at work each week thinking about or dealing with issues related to their personal finances.
- 48% of employees who provide financial support to adult children think it’s likely they’ll need to raid their retirement plans for non-retirement expenses. Among employees providing financial support for parents, that number is even higher with 60% saying they’ll need to take money from their retirement plans.
- Nearly half of all Millennial employees have at least one student loan, and 80% of them say that their student loan is impacting their ability to meet their other financial goals.
- 71% of those with employer-provided personal finance services say they’ve used the benefit, and those numbers have increased in recent years, particularly among Millennials and Baby Boomers.
- Nearly one-third (32%) of employees is not currently saving for retirement. The most frequently cited reasons are too many other expenses (78%), followed by having debt to pay off (50%).
- 37% of employees overall are confident they’ll be able to retire when they want—32% of women and 43% of men.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
