While financial stress has certainly increased overall this past year, the pressure and uncertainty of the COVID-19 crisis has caused workers to prioritize financial wellness and seek guidance for both short and long-term financial planning.
John Hancock Retirement’s 2020 Financial Stress Survey finds the pandemic’s impact on financial stress is “evident and significant.” The number of individuals reporting high levels of financial stress more than doubled from 11% pre-COVID to 27% since the crisis struck.
Further, while only 44% of participants reported experiencing financial stress prior to the pandemic, the number grew to 67% following the outbreak.
Based on today’s realities, including roughly 28% dipping into their emergency savings and 19% increasing credit card balances since the beginning of the pandemic, only one-third of survey participants feel their situations will improve in the coming year.
Simultaneously, the survey results revealed an increased interest in receiving advice from professionals both on retirement saving and investing, particularly among U.S. respondents compared with prior years.
Nearly three-quarters of U.S. participants reported that they would seek advice on retirement planning, up from two-thirds of respondents in 2019. When it comes to investment advice, 63% responded that they would seek it out in 2020 versus 50% in 2019.
“This year has delivered many challenges and both employers and employees have been asked to reimagine how they work,” Lynda Abend, chief data officer, John Hancock Retirement, said in a statement. “Employers are uniquely positioned to provide relief in many forms, including alleviating financial stress for their employees by revisiting the benefits playbook. Employees are looking for advice and guidance, which employers can provide through a holistic financial wellness offering.”
Opportunity for employers
With survey participants reporting increased interest in advice and 75% claiming that an employer-sponsored financial wellness program would positively affect their financial stress, the data suggests employers can have a direct impact on the financial wellness of their teams beyond salary.
Overall, 80% of respondents report that simply setting financial goals would be at least moderately helpful.
Ninety percent of respondents feel it’s important for employers to offer financial wellness programs, including roughly four in ten who find them highly important.
Additional noteworthy data from the 2020 Financial Stress Survey include:
- Personal finances and economy: More than a third (35%) of U.S. respondents say their overall current financial situation is fair or poor. When it comes to financial concerns, workers rate the state of the current economy as the top concern, followed by not having enough retirement savings. One in four of all respondents say they worry a great deal about losing their job—an increase for U.S. respondents from 2019—likely due to the impact of the COVID-19 pandemic on the economy.
- Employees are tuning in to their progress: Despite consumers’ increased worries about their current and future financial positions, they are more tapped into their financial needs than ever before. More than two-thirds of participants visit their retirement plans at least once a quarter to monitor their finances, including roughly four in ten who visit their plans once a month.
- Employees are looking for personalized retirement projections: Ninety-five percent of U.S. participants said that projections of estimated income and expenses in retirement, including healthcare expenses, would motivate them to prepare for retirement.
SEE THE FINANCIAL STRESS WHITE PAPER HERE
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
