Employee Perceptions of Financial Wellbeing Haven’t Improved

More employers are focused on improving employees’ financial wellbeing, yet how employees feel about their financial situations doesn’t appear to be getting substantially better, finds the Alight Solutions’ Health and Financial Wellbeing Mindset Study 2019, with responses from 2,501 U.S. employees.

Alight speculates this could be due to the increased spotlight financial wellbeing programs bring to their personal financial situation and hardships. However, the study also found employees don’t always seem to know what tools are available to them. More than one-third struggle with knowing where to go for wellbeing information—and younger employees are even less likely to know where to go. Among employees who have access to specific action-oriented wellbeing tools, awareness varies.

In 2019, fewer (75%) employees reported that financial wellbeing is important in their personal life today than in 2018 (79%). Yet, for financial wellbeing, only 34% reported a positive state in 2019.

One in five report they struggle to cover their monthly expenses, one-quarter say their levels of debt are ruining their quality of life—a seven percentage point increase over three years—and 42% are saving nothing for health care expenses not covered by insurance.

In addition, eight in 10 have some debt outside of mortgage (compared to three-quarters in 2017), with more than one-quarter having a student loan. Eighty-five percent of respondents say student loans somewhat or significantly impact their ability to save.

Feelings about retirement

An increasing number of employees are afraid of running out of money during retirement (up 10 points in two years), and believe they won’t be able to retire at their desired retirement age (up seven points in two years), according to the study. Yet, Alight found more employees indicate they are taking the right steps to address these fears.

Fifty-eight percent said they have estimated how much money they will need to live on when they retire, and 55% reported they have compared how much they will need in retirement and how much they are likely to have. Forty-five percent said they have created a financial action plan that details what they need to do in order to retire by their goal, and 40% reported they have projected how to withdraw from savings in retirement.

However, employees are struggling with investing. More than one-third (34%) agreed or strongly agreed they feel overwhelmed by the number of different ways they can invest their money, and 28% agreed or strongly agreed they don’t feel comfortable approaching financial advisers or investment companies for help. These are up from 29% and 26%, respectively, in 2017.

Employees value wellbeing programs

Despite not feeling better about their financial wellbeing, employees still value wellbeing programs, saying they are a good business investment and one of the reasons they stay with their employer, the study finds. Three-quarters said they are effective in helping them create a better financial future.

Across the five wellbeing dimensions in the study and all respondents, financial-related communications, tools and programs are ranked as the most valuable resources an employer can provide (i.e., a financial wellbeing site, retirement savings plan decision tools and one-on-one financial help). Employees, particularly younger ones, find websites, seminars and newsletters related to wellbeing valuable. All employees are, however, more likely to find value in tools that serve a specific purpose or action, compared to the general wellbeing knowledge imparted by websites and seminars.

However, the comfort level of providing employers with financial information has declined since 2015 (a consistent result across the generations). Alight speculates this could be due to data security and privacy concerns. Still, nearly three in five employees said they would be comfortable sharing personal financial information with their employer (or appropriate third party contracted by their employer) to allow them to provide personalized financial guidance or planning.

Actions to improve wellbeing programs

Among the actions Alight suggests in the study report for improving wellbeing programs is to avoid drowning employees in information. “Awareness of resources is important, but avoid overloading employees with a blitz of wellbeing communication once or twice per year. Take a 365-days-a-year communication approach and promote the resources your employees find most valuable and relevant,” Alight says.

Questions to ask include:

• Are you considering the employee experience in your communication plan?
• Have you audited or solicited feedback/research on your communication approach to determine the best way to keep communication simple and relevant?

Alight also suggests personalizing communications. ”As part of the information exchange with employees, generate targeted and results-driven communication. Send personalized messages to boost understanding of their options, the benefits of each option, and the resources and tools to which they have access.”

Questions to ask include:

• What results do you want your communication to drive?
• Is your communication personal enough to “speak” to your employees?

Employers should also look at the employee experience of making decisions. “When asking employees to make a decision or take a particular action, consider every step of the process through the eyes of your employees. Does each step make sense and are you providing appropriate guidance along the way? Are there simple tools available to support better decision making?”