More Workers Are Financially Stressed and Need Help. What Can Employers Do?

Financial worries are growing with economic volatility, but employers can support employees while protecting their bottom line

An uncertain economy is spurring stress about financial futures, and many workers want tools that increase confidence in their planning. A poll sponsored by Franklin Templeton found that 70% of employees “would like more holistic [benefits] options (i.e., assessing all of my financial goals together) to address the current economic climate.”

Employers who provide only basic benefits and access to 401(k) plans may not be doing enough to attract and retain most employees.

Fortunately, organizations can help meet these needs while reaping the rewards of a more engaged, healthier, financially prepared, and stable workforce that increases ROI.

What workers worry about, and what they want

Franklin Templeton surveyed “1,000 employed U.S. adults” in October last year, assessing “the perspective of the modern American worker.” The research revealed growing stress about “financial independence, plans for retirement, and feelings of job security,” exacerbated by today’s volatile economy. Among the findings:

• 66% of workers experiencing “negative effects (i.e., feeling anxious, having trouble with sleep, strained social relationships, feeling distracted at work, etc.) … due to the current economic environment.”

• 73% believe “soaring living expenses changed the way I envision my retirement,” with recent events pushing “the planned retirement age back 3 years, from 62 to 65.”

• 70% say they want more customized, “holistic” benefits.

• 77% stated “they’d be more likely to participate or contribute more to their retirement savings” if they had “more personalized options.”

• 59% “count on” their employer to “help [them] navigate the turbulent economic times,” but only 40% are “satisfied with how [their] current employer addressed the rising inflation.”

Those last few stats show why offering customized benefits can impact retaining good workers and attracting new ones. But another concern is what stress over finances does to employees’ health and employers’ bottom lines.

Why financial confidence and wellness matter

Respondents to the above survey reported that their financial health affects their mental (79%) and physical (73%) health, and nearly half “feel anxious about the future.”

Medical authorities and researchers have long reported on financial stress’s impact on health, linking it “to heart disease, diabetes, migraines, sleep problems, depression and more.” And if supporting employees’ well-being isn’t incentive enough, this stress and its side effects also cost employers immense sums of money.

PwC’s annual “Employee Financial Wellness Survey” reports that over “half of financially-stressed employees … spend three hours or more each week dealing with personal money issues during work time.” Beyond the direct value of lost time, 76% say this pressure “had a negative impact on productivity.” Further, individuals are “twice as likely to look elsewhere,” and 76% are “attracted to another company that cares more about their financial well-being.”

Another survey reports that financial stress resulted in “15.3 hours of reduced productivity and engagement each week, leading to an estimated $4.7 billion loss per week for employers due to worsening employee financial health.” And other research projects that lost productivity due to financial stress costs North American employers $664 billion a year.

Individualized benefits that include expert financial guidance can make a difference

Employers can’t solve all of their employees’ money woes, of course. But they can help many workers achieve greater financial confidence and stability. This impact is especially likely among the majority of individuals who want better workplace support.

To meet this need, organizations must go beyond offering a traditional 401k and leaving participants’ questions up to the plan record-keeper’s website. The old 60/40 stocks-to-bonds ratio that adjusts over time and simplistic “how far am I from retirement” calculators aren’t enough.

Individuals have unique needs and want to customize benefits based on their situation, along with access to expert guidance instead of generic answers. So, what might this look like? Benefits might include:

• Providing group financial literacy workshops, covering the differences between asset classes, managing and reducing debt, leveraging tax benefits, estate planning, navigating insurance, and more.

• Individualized coaching from experts who offer specific guidance after evaluating an employee’s situation and goals. For executives, financial planning as a perquisite can be an extremely valued offering.

• A “cafeteria plan+” that’s more like a benefits buffet at the Ritz: a diverse selection including traditional items, such as health insurance and health savings accounts, plus even more. A massive value-add is an employee assistance program (EAP) providing direct help from service professionals in areas such as tax planning, legal services, insurance options, investing, annuities, home buying, elder care, college savings, and more.

Some or all of those options can significantly boost financial literacy and preparedness for life events. Regardless of the exact mix, the key elements of financial wellness programs are choice, customization, and access to information and benefits that make sense for individuals.

For example, the “sandwich generation”—people raising children and caring for aging parents—is growing as our population gets older. So, where do they turn to figure out how Medicare and Medicaid work beyond googling the answers at work—and still being confused?

Or, say an employee inherits a few hundred thousand dollars and has no idea how to invest that much money wisely. Unfortunately, the resources on their 401(k) plan website probably won’t explain non-retirement investments or insurance and annuity options, nor provide an accurate mix of other potential vehicles reflecting their life stage and goals.

What if an employee’s tax preparation (or even a highly valued freelance worker’s) suddenly and significantly grows in complexity, and TurboTax and H&R Block don’t cut it anymore?

Or a valuable young employee is overwhelmed by managing student debt and doesn’t know where to start regarding investing and retirement planning?

People have unique circumstances. And while some companies provide Employee Assistance Programs, workers often aren’t aware of them, or these programs aren’t diverse enough to provide the answers they need. The best, customized benefits plans that make a real impact are well-utilized and provide concierge services meeting the requirements of various employees.

Employers can help financially stressed workers — and reap greater benefits from benefits

The recent economic volatility will likely calm down, but financial worries are timeless. Many workers continually struggle to get ahead. Over a third of the individuals making $100,000 or more live paycheck to paycheck, a proportion that jumps to 64 percent for all US workers. And even those with surplus cash each month need to make sure they deploy their resources wisely.

Financial stress harms employees and the employer, but the latter is uniquely positioned to tackle the problem. Providing the individualized benefits options many people want and need helps improve health and productivity while making valued performers more likely to stick around.

Designed and implemented correctly, these programs are a win-win for individuals and the organization.

Karp HR Solutions helps businesses master the mix of finance and human resources. Contact us today for a free consultation.