Financial Stress is Still Impacting Employees
Financial stress continues to confound employees. For many workers today, the financial stress struggle is real. Employees are bringing their financial stress to work with them, or missing work because of it. This results in absenteeism and lost productivity. Employers are keenly aware of workers’ financial stress and are making strides to offer benefits to help them. Still, employers’ efforts to assuage workers’ financial stress may be falling short.
What, exactly is financial stress? In general, it’s a condition that’s caused by a single or multiple financial events that create anxiety and worry, according to the Financial Health Institute. It may be accompanied by a physical response, such as anxiety or a panic attack, or an inability to sleep. A study from the American Psychological Association found that 72% of Americans feel financial stress at least some of the time, and 25% have extreme financial stress.
According to a recent MassMutual survey, cited by CNBC, nearly 8 in 10 employers who offer a workplace retirement plan believe their employees are having financial troubles, thus resulting in financial stress. MassMutual’s findings come at a time when employees are being tasked with handling more of their financial responsibilities, such as healthcare and saving for retirement, while employers have become more hands-off and are helping less with these costs.
As CNBC aptly observed, workers’ financial stress is being caused in large part by the following trends: “Many companies have shuttered their pension plans over the past few decades in favor of 401(k) plans, while also shifting to high-deductible health plans paired with health savings accounts, which allow employees to save for medical bills. Fidelity Investments estimates a 65-year-old couple retiring this year will need $285,000 to cover out-of-pocket medical costs in retirement.”
In addition, Americans now have longer life expectancies, which means they need to save more for retirement and make their money last longer during their post-work years as well. In addition, 7 out of 10 Americans may need long-term care services at some point, increasing the likelihood that many will have to pay for costly services such as nursing home care. Talk about financial stress.
Per MassMutual’s research, employers believe their employees’ primary sources of financial stress are credit card and other consumer debt, housing costs and an inability to save for emergencies. Other causes of financial stress that are close behind: medical costs, childcare expenses, and retirement savings challenges.
Employers are trying to assist employees in reducing their financial stress. More than half (53%) of companies now offer workplace financial wellness programs, twice that of two years ago, according to a Bank of America report cited by CNBC. Employers are offering these programs as a way to help workers cope with and proactively manage financial stress. Financial wellness programs come in various forms, including online financial tools to help employees to budget and manage their debt, as well as advice from financial planners.
However, employers have more work to do when it comes to easing workers’ financial stress, CNBC observed. Seven out of 10 employers believe their employees face financial stress that their current benefits offerings don’t address, such as cost of living, debt, and lack of savings for retirement and emergencies.
Since financial stress is a big issue for workers, employers should continue to expand their efforts to help employees deal with it where possible. Offering financial wellness programs is a start, but they need to include more than mere education. There needs to be an accountability component and/or hands-on advice and guidance, such as regular interactions with a financial advisor, to help employees reach their goals. In the article, CNBC advised employees to put together an action plan to combat financial stress and overcome their financial challenges. However, it also pointed out that most employees aren’t even aware of the benefits available to them at work to help them deal with financial stress. As such, when it comes to reducing financial stress in the workforce, employers must lead the way.
