Perhaps it’s no big surprise that employers are more concerned about their employees’ financial wellness today than they were 8 years ago, when the term “financial wellness” was still virtually unknown to the general public. But a new study shows just how far things have come since then.
Today, 62% of employers feel “extremely” responsible for their employees’ financial wellness, compared to just 13% saying so in 2013, according to findings announced today from Bank of America’s 10th annual Workplace Benefits Report.
This sense of increased responsibility by employers is even greater with respect to their employees’ retirement, with 80% feeling very or extremely responsible for helping employees prepare for retirement healthcare needs and costs, up from 22% in 2012; and 78% for preparing employees for retirement income needs, up from 33%.
The range of topics being addressed by workplace financial wellness programs has increased significantly as well, with employees seeking support and resources across more of their financial lives. Compared with findings from the 2013 Workplace Benefits Report, these programs today focus on:
- Saving for retirement (81% vs. 70%)
- Planning for healthcare costs (71% vs. 38%)
- Budgeting (63% vs. 14%)
- Saving for college (55% vs. 13%)
- Managing debt (54% vs. 15%)
“Over the last decade, we’ve seen a significant increase in the range of financial wellness programs, which have become an integral part of employer benefits offerings,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions for Bank of America. “While this growth is essential and encouraging, the pandemic has brought the topic of holistic well-being into sharper focus. Though the effects of these times have yet to be fully understood, employees are facing greater stress and demands on their time, straining their overall sense of wellness. More needs to be done to ensure employees feel supported at work—financially, physically, emotionally and mentally.”
The report examines trends in workplace financial benefits and wellness, tracking both employee and employer sentiment. Based on a nationwide survey of 996 employees and 808 employers, key findings include:
- Financial wellness and productivity are interconnected. 83% of employers believe employee financial wellness programs and tools help to create more productive, loyal, satisfied and engaged employees. This works both ways, as 57% of employees feel their well-being has a great impact on productivity. When asked what factors contribute to their overall sense of well-being, employees cited physical (51%) and mental wellness (54%) only slightly more so than financial (49%).
- Financial wellness has declined since 2018, and varies by generation. In March of this year, 49% of employees rated their financial wellness as good or excellent, down from 55% in 2019 and 61% in 2018. Fewer Gen Z (41%), Millennial (41%) and Gen X (38%) employees rate their financial wellness as good or excellent today, compared with 60% of Baby Boomers and the Silent Generation.
- Professional financial advice and holistic support remain top priorities. Fewer than four-in-10 employees say they have made significant progress toward specific personal financial goals. The top obstacle cited for not achieving their goals is a lack of disposable income after monthly expenses. Employees ranked advice from a financial professional as the top employer-offered resource, with whom they want to discuss a range of topics, and have flexibility in terms of how they access advice.
- Debt is a multifaceted challenge. 82% of employees have some type of debt, with the most common types being credit card (50%), mortgage (46%) and student loans (21%). Debt can erode a sense of overall well-being. Fifty-nine percent of employees say they do not have a high level of control over their debt, and 36% say it affects their ability to achieve financial goals.
Women lag behind on financial wellness
One of the key takeaways from the report is that women are in need of financial wellness programs tailored to their unique financial journey.
The report found that 41% of women rate their financial wellness as good or excellent, compared to 58% of men. This—combined with the fact that women often make less than their male counterparts, are more likely to take time out of the workforce to raise a child or provide care for a family member, and typically live longer—underscores the need for financial wellness programs tailored to women’s unique financial journeys and life paths. The study revealed several differences between men and women, including on the topic of debt:
- Women are more likely to have credit card debt (56% vs. 43% of men) and student loans (30% vs. 11% of men), and are more likely to feel a lack of control over their debt (67% vs. 49% men).
- Women are more than twice as likely to rank paying off credit card debt among their top financial goals (21% vs. 9% of men).
- Women are nearly twice as likely to cite lack of cash after monthly expenses as a primary challenge to achieving financial goals (47% vs. 27% of men).
“Women have inherently different financial journeys than men, creating a clear need for employers to target financial wellness solutions by both age and gender,” said Kevin Crain, Head of Workplace Solutions Integration for Bank of America.
For more findings from the Bank of America 2020 Workplace Benefits Report, including action steps for employers, click here.