Financial Distraction Confuses Benefits Decisions

Four in 10 Americans admit knowing little or nothing about their employee benefits, according to the 2015 MassMutual Employee Benefits Security Study. Millennials, Gen Xers, parents and low-income Americans find it difficult to manage finances, and many say issues with personal finance distract them while they’re at work.  

Most workers understand the importance of their personal finances and employee benefits. Basic knowledge of savings accounts and credit card balances are understandable, and most know which benefits are most important to them. However, employees indicate they are struggling to know whether they are on track to retire comfortably or how much money they should be spending on their employer-provided benefits.

On the surface, most people seemingly have their financial house in order, saying they prioritize understanding their personal finances (77%), having enough medical insurance (74%) and being on track to retire comfortably (65%), MassMutual finds. Yet 38% say they know little or nothing about their employer-provided benefits such as health care, life insurance, 401(k) retirement plans and other benefits. Two in five respondents (42%) say they are clueless about whether or not they are on track to retire comfortably, the study found.

“Personal finances continue to bedevil many Americans, especially when it comes to understanding and making the most of their employee benefits,” says Elaine Sarsynski, executive vice president of MassMutual Retirement Services and Worksite Insurance. “MassMutual’s research finds that many people say they need help to better understand their personal finances, but only one in five people actually use an online financial tool for assistance.”

While many people assert they do just fine managing their finances, 37% find doing so "somewhat" or “very difficult,” and 40% say personal financial problems are a distraction at work. Some groups find personal finance more difficult than others, including Millennials (58%), parents (50%), Generation X (47%), women (44%) and those with annual incomes of $50,000 or less (44%). Baby Boomers were the least likely to encounter difficulty in managing their finances (28%) or being distracted at work by financial issues (24%).

Millennials (82%), parents (80%) and Gen Xers (78%) are especially interested in using an online financial tool, according to the study. Overall, one in three respondents (32%) would be more likely to enroll in their employee benefits if they could use an online tool to help them figure out their needs.

Workers who are distracted by their finances spend more time on their finances and their employer-provided benefits, MassMutual finds. These employees also say it is much more difficult to manage their finances. Those who are distracted are also less satisfied with their benefits. The employees most distracted by their finances are:

• Millennials (age 18-34) 58%;
• Hispanics (51%); and
• Parents (50%).

Employees think their personal finances and health are most important to them, ahead of even being able to retire comfortably. Other issues, such as keeping up with news, politics, and sports and entertainment, are not as important to employees. The following factors were rated “very important” by survey respondents:

• Understanding their personal finances (77%);
• Being on track to retire comfortably (65%); and
• Eating a healthy diet (48%).

The 2015 MassMutual Employee Benefits Security Study was fielded by KRC Research as part of an initiative to help educate workers about their employer-provided benefits and enable them to make better choices in selecting health care coverage, insurance protection, retirement savings and other benefits. The study focused on 1,517 working Americans who were at least age 18 in a wide variety of jobs and industries. The study can be downloaded here.