If more employees actively participate in financial wellness programs, it only makes sense that overall financial stress levels among those employees would decrease.
That’s an underlying message emanating from new research, which found financial stress is indeed a good predictor or financial wellness.
“The path to a successful retirement is paved by financial wellness.”
Specifically, retirement plan participants who report being stressed about debt are saving less for retirement than those who are not stressed, the research found. The insights are based on T. Rowe Price’s annual Retirement Savings and Spending study and analysis of its proprietary Retirement Behavior Index, which measures people’s day-to-day financial behaviors, progress made towards the financial goals they set for themselves and how, ultimately, how today’s actions may affect their future retirement.
“The path to a successful retirement is paved by financial wellness,” said Joshua Dietch, head of retirement thought leadership at T. Rowe Price. “Employers, financial professionals, consultants, and recordkeepers are uniquely positioned to encourage the promotion and adoption of financial wellness programs which can reduce financial stress and lead to greater savings and better participant retirement outcomes.”
The study’s analysis of financial stress included an assessment of factors like stress arising from debt, budgeting, retirement and nonretirement savings, managing investments and healthcare costs. Additional findings from the research include:
- Debt, particularly unsecured debt, correlates with financial stress.
- 73% of younger workers (30 years old and below) reported moderate to high levels of stress related to budgeting compared to 40% of older workers (50 years old and above).
- Women are 26% more likely than men to experience higher levels of financial stress, particularly as it relates to debt, budgeting, nonretirement savings, and health care expenses.
- Black and Hispanic workers are 34% and 40% more likely than white workers to experience higher levels of debt-related stress.
- Workers who start saving for retirement early in their working years have higher Retirement Behavior Index scores than those who start saving later in their working years.
SEE ALSO:
• Worker Financial Stress Increases, But So Do Retirement Contributions
• Defaults Matter: T. Rowe Price Analysis Shows Just How Much