A new study confirms the same ole results: lots of employees are facing financial challenges. And which is the most common money-related struggle? Debt.
According to a survey by the International Foundation of Employee Benefit Plans, seven in 10 employers say their workers are having difficulty managing credit card and other debt. Saving for retirement, paying for children’s education expenses and covering basic costs of living were also cited by employers as top worries among employees.
This is not only bad for workers, but also for business owners. Julie Stich, CEBS, associate vice president of content at the International Foundation of Employee Benefit Plans, explains: “An employee’s personal financial stress—whether it’s long-term like saving for retirement or immediate like paying the rent—can have a direct impact on their performance at work.”
In a report titled Financial Education for Today’s Workforce: 2018 Survey Results, the Foundation gets more specific. According to employer respondents, financial difficulty has interrupted the workplace “in the form of stress (79 percent), the inability to focus on work (64 percent), physical health concerns (36 percent) and absenteeism (34 percent).”
What’s worse, if nothing changes, employees’ financial futures look bleak. Forty percent of employers report that their workers are only a little bit or not at all financially savvy. Only slightly fewer (36 percent) say employees are barely, if at all, prepared to retire successfully at retirement age.
Fortunately, many businesses are taking action. “Employers are offering financial education to help employees manage their money, understand their workplace benefits and improve their investment decisions,” Stich said.
And their efforts are unlikely to be in vain. Two in five surveyed employees say demand has increased among workers for these types of programs over the last two years.
The report notes 63 percent of employers currently offer financial education programs for employees. Another 19 percent are considering doing so.
In 2016, just 14 percent of employers had set aside a portion of their budget for financial education programs. This figure has grown to 24 percent in 2018, and another one in five employers are considering adding it to their budget. Among those who have already set money aside, more than half plan to increase that amount within the next two years.
Within the programming, “the top five most common topics covered include retirement plan benefits, preretirement financial planning, budgeting, investment management and retiree health care,” according to the report.
Some employers are even going as far as providing education to employees’ spouses (39 percent), polling employees to determine areas of most interest (35 percent), offering education in multiple languages (30 percent) and providing education by generation (24 percent).
Other employers (17 percent) are targeting education to address life events, such as “approaching retirement, funding an education, getting married, purchasing a home, getting divorced or having a child.” Just under a quarter (23 percent) of employers who are not currently doing this are considering doing so in the future.
A mere 6 percent of employers who are offering financial education think their program is unsuccessful, compared to 57 percent who think it is.
“Most commonly, employers are measuring success through increased participant deferral rates in defined contribution (DC) plans, overall participation rates in DC plans, and participation in specific initiatives such as in-house seminars,” the Foundation’s report concludes.