10 minute read
Workers Have Spoken: Financial Well-Being Benefits Matter
Although the economy is showing signs of improvement, workers need benefits that will help ease their financial stress.
By Mike Wilbert
Financial well-being benefits have never been as important as they are today — for workers, employers, and benefit brokers and advisors. Workers, many of whom were living paycheck to paycheck prior to the COVID19 pandemic, find themselves farther behind the eight ball today and remain financially stressed. Employers feel the effects of worker financial stress on their bottom line and are now fighting to win the talent wars that ramped up as a result of the pandemic.
Benefit brokers and advisors strive to make sure their product portfolios include an arsenal of financial well-being benefits in order to make sure their clients’ recruitment and retention efforts are competitive.
Employees And Their Finances: 2021
Nationwide Harris Poll research conducted on behalf of Purchasing Power reveals a great deal of insightful data on the state of employee finances, financial stress and COVID-19 effects.
A key finding was that household income levels don’t discriminate. The survey shows that the pandemic had workers at all income levels living paycheck to paycheck from February 2020 through February 2021. Almost half of full-time employees in all household income levels reported that their financial situation was worse in February 2021 than it was prior to the COVID-19 pandemic. That includes 44% of those making more than $75,000 annually and 41% of those making an annual salary of more than $100,000.
Faced with furloughs, layoffs and monthly income loss, employees turned to several sources to cover expenses. Delta Air Lines reported in November 2021 that employees took about $1 billion in early withdrawals from their 401(k) retirement plans during 2020, indicating that workers were in financial stress.
The Harris Poll survey showed how workers covered the monthly expense challenges of the pandemic, illustrating the impact on their financial well-being:
» 32% took money from savings.
» 26% took money from their emergency fund.
» 17% withdrew funds from their 401(k) or other retirement savings.
» 13% requested a payday advance from their or their spouse’s or partner’s employer.
» 13% received financial assistance from their or their spouse’s or partner’s employer.
» 10% took out a second mortgage or a home equity loan.
The workers who answered the survey readily admitted their financial stress negatively affects their work. This stress disrupts their physical health, their ability to focus, their productivity at work and their job satisfaction. This confirms that employee financial stress impacts the employers’ bottom line through increased health care costs, loss of productivity and lower employee retention rates.
Workers’ Financial Situation And Worker Stress: 2022
The Harris Poll found that 95% of employees reported they have financial stress, so what can we expect 2022 to mean for employee finances? Although the economy is better now than it was during the shutdown in 2020, the pandemic and its effects (as well as the current rise in inflation) are still with us, and it will take more time for workers’ financial situation to recover.
According to the survey, more than half of full-time workers expected their household financial situation to be better by January 2022; however, they anticipated their financial stress level will be the same or worse than it was last year.
What are the top three things workers worry about most? Here’s what the Harris Poll revealed.
» 37% worry about having enough in emergency savings to cover unexpected expenses that might come up, such as car repair, home repair or a broken appliance. Those responses came from workers making less than $50,000 a year (44%) to those making more than $100,000 annually (34%) and all points in between.
» 35% worry about not having enough retirement savings.
» 34% worry about their mental or emotional health as a result of the pandemic.
Other items mentioned included unexpected medical expenses (30%), layoff or job elimination (27%), paying for basic necessities (26%), paying credit card bills on time (25%), incurring additional new debt (18%) and paying student loan debt (14%).
Voluntary Benefits In The Spotlight
Financial stress has always been a factor in the workplace, affecting workers' productivity and impacting their health and health care costs for the employer. Realizing that workers at all income levels are affected by financial stress, employers need to make sure their benefits packages provide robust financial wellness benefits that can provide a lifeline during these difficult times.
Because they can address many of the specific needs that workers have as they continue to struggle with and overcome
Financial well-being benefits employees would be interested in taking advantage of if offered through their employer
Employee Purchase Program .................................... 28% Bill Payment Programs ................................................27% Financial Counseling.....................................................24% Low-Interest Installment Loans ................................24% Identity Theft Protection ............................................23% Medical Deductible Financing....................................23% Student Loan Repayment Benefit Program ...........15%
SOURCE: The Harris Poll on behalf of Purchasing Power
pandemic challenges, voluntary benefits have taken on a significantly more important role now. In recent years, voluntary benefits have seen more popularity as the products themselves have become more diversified and appealing to the multiple generations in the workplace. But then, voluntary benefits have always been a win-win for employers and workers. For employers, voluntary benefits are an excellent recruiting and retention tool, while workers see voluntary benefits as an opportunity to choose benefits that they need or want.
The impact of COVID-19 on workers’ lives and their finances really put the spotlight on the value of voluntary benefits, which have given employers a way to meet the shifting needs and priorities of their workforce during this critical time. Virtual care, mental health services, critical illness coverage, child care and financial well-being are among the needs and priorities for employees these days as they deal with pandemic reality.
Why Financial Well-Being Benefits Matter
There’s a lot of talk right now about the “Great Resignation,” the spike of workers voluntarily leaving their jobs in response to the COVID-19 pandemic. But workers aren’t leaving the workforce. Instead, they are seeking better opportunities and accepting new jobs, and it’s not really about money. They are going to new jobs where they will have more family time and a better work-life balance, and where employers value them more. Workers want to know their employers care about them. And they expect employers to show they care by the benefits they provide, especially financial well-being benefits.
In the Harris Poll, workers strongly indicated that financial well-being benefits do matter.
» 78% of full-time workers reported that they can tell how much their employer cares about their financial well-being by the benefits they offer.
» 79% said they would be more likely to stay with their present employer if the employer offered more financial wellbeing benefits.
It will take time for workers’ financial situation to improve, and their financial stress in turn impacts their employers’ bottom line through increased health care costs, loss of productivity and decreased worker retention rates. Smart companies are finding ways to help, which will ultimately mean increased worker performance and improved retention.
Mike Wilbert is chief revenue officer at Purchasing Power, a voluntary benefit provider. He may be contacted at mike.wilbert@ innfeedback.com.
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Inflation Looms As Biggest Retirement Risk In 2022
Americans say they worried the most about the COVID-19 pandemic in 2021, but a new threat to their retirement plans is looming: rising inflation. The annual New Year’s Resolutions Study conducted by Allianz Life revealed inflation is seen as the biggest risk to Americans’ retirement plans.
Nearly half (48%) of respondents identified the pandemic as the most worrisome threat of 2021, with the rising cost of living following at 38%. However, looking ahead, a full one-quarter of Americans now view rising inflation as the single greatest risk to their retirement plans, more than doubling from 2020 (8%).
The survey also found a low desire for professional assistance with financial planning among the respondents. In fact, only 22% of respondents said
they are more likely to seek the advice of a financial professional in
2022, down from 27% last year.
When Do Americans Hope To Retire? The average age at which Americans hope to stop working is 62. But exactly when people hope to stop working varies by generation. Those were among the findings of a Natixis Investment Managers survey.
The younger the age group, the young-
er they hope to retire, the survey found. Generation Y — ages 25 to 40 — plans to retire at an average age of 59. For Generation X — now 41 to 56 — the average age is 60. Baby boomers — who range from 57 to 75 — indicated they plan to work longer, with an average expected retirement age of 68.
Eighty-three percent of investors who are still in the workforce said they are confident they will be financially secure in retirement. Yet 41% of respondents said achieving financial security in retirement is “going to take a miracle.”
Younger Generations Look To Social Media For Advice
When young adults want financial advice, they’re more likely to turn to YouTube or
TikTok than they are to speak with an
advisor. That’s the word from the National Association of Personal Financial Advisors, which found that more than one-third (39%) of Americans under the age of 65 are receiving their financial advice online or from social media.
And that lack of financial guidance is inhibiting their ability to prepare for retirement, with more than one-third (34%) of millennials and Generation Z saying they need advice to help them
get ready for their post-employment
years.
Of the social media platforms out there, YouTube seems to be the most popular place for Gen Z (63%) and millennials (71%) to discuss financial planning, while TikTok is gaining popularity with Gen Z (56%), according to the survey. More than 60% of the respondents who receive their information online said that they have acted on that advice.
38% of millennials said they feel unprepared for their financial future. 30% of Generation Z feels unprepared.
SOURCE: National Association of Personal Financial Advisors
The State Of Retirement: Some Statistics
Retirement may be longer than expected. According to the Social Security Administration, a healthy 65-yearold woman has a very good chance of living to age 86, and a 65-year-old man has a good chance of reaching age 84. More Americans are planning for longer-than-expected retirement. According to a TD Ameritrade study, 81% are moving money in preparation for living longer than their ancestors did by reducing expenses, buying secured life insurance and maximizing their contributions to retirement plans.
Many Americans are accessing their re-
tirement funds early. The TD Ameritrade survey showed that 44% of Americans ages 40 to 79 have taken money out of a retirement plan, while 46% of people 40 to 49 have done so, as have 53% for people 70 to 79.
DID YOU KNOW?
62% of businesses with a 401(k) automatically enroll workers in the plan.
SOURCE: Plan Sponsor Council of America.
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