PwC’s 8th annual Employee Financial Wellness Survey was conducted during the last two weeks of January 2019. It tracks the financial and retirement well-being of working U.S. adults nationwide. This year it incorporates the views of 1,686 full-time employed adults. Participants have been categorized by generation using the following age groups: 18-22 (Gen Z), 23-37 (Millennials), 38 to 58 (Gen X), and 59 to 75 (Baby Boomers).
The assessment of this year’s PwC’s Financial Wellness Survey clearly reveals that employees are openly coming up about their financial worries related to cash flow and debt challenges. Though unemployment rates are low and slight increases in wages have thrown some respite on the employees, they still are finding it hard to save and to expend on their cost of living. The other side of the tug of war has employers who need to have a stern look at employee welfare programmes to maintain a balanced game. As such employee absenteeism and turnover, and dissatisfaction on a personal level has to be accounted for and addressed by addressing the variegated challenges being faced on one hand and motivating employees to improve the financial well-being and retirement readiness.
Employees indicate that financial wellness means being stress-free and achieving financial stability:
- About 34% of the employees feel that not being stressed about their finances is financial wellness to them, while 18% feel to be debt-free is what constitutes financial wellness.
- 16% feel that having adequate savings and not worrying about unexpected expenses is financial wellness, while 12% feel it is financial freedom to make choices to enjoy life.
- A smaller percentage – 4% – feel it to be in the freedom to retire when they want.
- Demographically too differences were noted when it came to the stress-free strata of employee populace. About 38% of millennials, 34% of Gen X, and 25% of Baby Boomers felt that they led a financially stress-free life.
Employees are finding it challenging to cover everyday expenses despite the fact that employee spending contributes as one of the major movers in the economy. While economic growth globally has been stupendous, jobs growth hasn’t kept up. An increasing number of youngsters are incurring debts to meet their personal expenses and employees are carrying balances on their credit cards. The cost of higher education is rising beyond the capacity of many in the salaried class, further adding to their debt. The old, understandably, are more worried about their after retirement expenses – especially health expenses.
“We believe that employee anxiety will continue to mount without a greater emphasis on increasing savings and improving longer-term financial well-being.”
~ PwC survey report
Financial stress as the prime factor
As per the survey:
- Financial or money matters have been stated as the top cause of stress at 59%,
- Followed by the job at 15%,
- Relationships at 12%,
- Health concerns at 10% and,
- 4% contributed by other causes.
According to the report, the difference between a stressed and an unstressed employee is visible in them living on extreme ends of the spectrum. Stressed employees are more likely to have credit card balances and struggle to pay even petty expenses nearly four times more than their unstressed counterparts. Due to stress, these employees are likely to say nearly five times more than they face distraction at work due to their finances.
An increasing number of employees are claiming to work during their retirement period for their inability to save enough in the present. They have saved less and are intending to raid retirement plans just before retirement.
The survey shows that more than 80% of the organisations today encase a wellness programme for their employees, but most of these programmes are traditional retirement education and planning programs lacking focus on the financial aspect of stress.
More than 80% of the employees feel that they will be working post-retirement. And about one-third feel the need to work after retirement to support themselves financially. The definition of retirement is evolving to include longer periods of unemployment and a more gradual transition into retirement. These changing parameters need to be looked upon and researched to be taken care of well in the wellness programmes for the employees.
Many employees are now planning to postpone their retirement for they think they haven’t saved enough and due to growing concerns around healthcare costs. Most are uninformed on how to plan their retirement and lack a solid plan. This leads to an increase in stress levels in the present and difficulties in achieving financial stability in the future. Only 43% of the baby boomers planning to retire within the next 5 years are sure about the income they will need to supply themselves during their retirement. These stats are a cause for concern, as they shine light on the level of retirement plans initiated by employers, their inability to deal with employees’ concerns and the need to rethink and replan such programmes for the benefit of employees.
The Curious Case of the Sandwiched Generation
The sandwiched generation aka whose financial expenses are affected due to the care of both their children and parents, find themselves sacrificing their own well being for the ones they care. Millennials and Gen X constitute the majority of the workforce while Gen Z has started to enter the workforce as well. Each of these deal with their own set of issues and problems.
- 24% of the employees say their employer offers services to assist them with personal finances and more than two-thirds (71%) say they’ve used the services.
- The survey also indicates that employees providing financial support to parents or in-laws face additional debt and retirement challenges. About 42% of employees provide financial support to their children over 21 years of age and about half are willing to give up their financial well-being for the benefit of the students.
- Millennials who have entered the workspace are already burdened with one or more student loan impacting their financial capability.
In order to prevent employees from using their retirement plan or savings for meeting current expenses of their parents or children, employers will need to focus not only on individual personal finances, but also on the family unit as a whole such that a balance can be made between emotional decision making and sound financial planning.
What the Future Holds for these Financial Plans
With digitalisation and expansion of online spaces, employees face the task of determining whom to reach out and whom to trust. A multitude of organisations and online portals are providing a plethora of financial and retirement plans that may or may not benefit the employees. Here, it may be the responsibility of the employer to inform employees about their actual standing and what focus areas they can look to save more for the future. Employers may also need to formulate plans on the lines of the individual as well as family welfare financially. 71% of the employees claim to use these employer-provided services and the numbers have been increasing. Many employees wait for financial advice or seek it personally before they set in to raid the choices. It, thus, becomes incumbent upon the employer to engage employees continually with planning and prevention and intervening when issues are severe and options limited. The employers need to be on their edge in dealing with confusion and concern that hamper the financial wellness of their employees.
In order to tackle the issues highlighted in our survey, employers will need to take a hard look at their programs to determine whether they effectively address the variety of financial challenges their employees are facing while motivating employees to engage and change behaviors to improve overall financial well-being and retirement readiness.
~ PwC Financial Wellness Survey