Whether you’re planning to integrate a financial wellness technology solution or a full-on digital transformation effort, here are a few ...
As a company working to improve the level of satisfaction people feel about their finances, Questis closely monitors the financial wellness landscape for new data and information about trends regarding employee stress. In our recently released white paper: Improving Employee Financial Wellness: Why It Matters And What Employers Can Do About It, we want to share our findings with you and bring to light the severity of the financial stress epidemic. Through our research, we found cause for concern. We hope by reading it that you will gain a better understanding of the scope of the problem and find useful information that can guide you in deciding what to do about it.
Over the weeks to come, we’ll be releasing segments of the white paper as blog posts. Feel free though to explore the full white paper on our website.
Without further ado, here is the first segment:
Several recent surveys conducted by different organizations have consistently documented that American workers across all demographic groups are experiencing increased levels of financial stress. Workers at all income levels are struggling. Estimates of the number of employees living paycheck to paycheck range from 52% in 2013 up to 76% in 2016. More recently, Bankrate found that 63% of Americans are unable to handle a $500 unexpected car repair or $1,000 emergency room bill, a result that has been widely publicized. Many workers of all ages now carry high levels of student loan debt. Nationally, student loan debt exceeded credit card debt in 2010, auto loans in 2011, and passed the $1 trillion mark in 2012.
According to the 2016 PwC annual Employee Financial Wellness Survey, conducted using a representative sample of 1600 full-time employed US workers, over half of the employees surveyed–52%–reported experiencing financial stress. Forty-five percent reported that their financial stress had increased over the previous year. Millennials (age 21-34) were the largest group reporting stress over financial matters at 51%, compared to older workers. 62% of those who are already financially challenged list being able to pay monthly expenses as their biggest financial concern, even among people with an annual household income of $100,000 or more. And 51% of those in the PwC survey cited above regularly carry balances on their credit cards.
Women in particular face a greater challenge when it comes to financial stress. Women as a group face greater financial challenges, especially in regards to saving for retirement, due to their longer average lifespan, taking time out of the workforce in response to caretaking responsibilities, working part-time without access to a workplace retirement plan, not to mention wage inequality–women still earn roughly .80 to the dollar compared to men, and wage inequality is even worse for women of color. All these factors can make it harder for women to save the same amount of money for retirement. According to a Money 2015 survey, one in three Americans have saved $0–zip, nada, nothing–for retirement. Women are 27% more likely to be in that group, and 63% more likely to have less than $10,000 saved for retirement.
The retirement crisis facing American workers has been well-documented in the popular media. Although some critics believe that the direness of the situation may be exaggerated, even those workers who plan to ‘course correct’ through working longer, reducing expenses, or turning a hobby into an income source may find this more difficult than expected. For example, while 75% of respondents in a recent Bank of America survey said they planned to work at least part-time in retirement, the reality is that only 27% of retirees are employed, even on a part-time basis.
So it’s no wonder that workers are stressed about their finances. And when troubled employees bring their concerns to work, employers incur significant costs through avoidable events such as presenteeism, absenteeism, turnover, and indirect costs related to increased health care utilization. It’s no wonder too then that increasing numbers of employers are turning to financial wellness solutions in an effort to mitigate these. In subsequent posts, we’ll look at how employees’ financial stress impacts companies, and what employers can do about it.