Financial Wellness Programs Need to Become Personalized

With a solid economy and the jobless rate at a 49-year low, one would expect that financial stress among workers would be on a steady decline. However, according to “PwC’s 8th Annual Employee Financial Wellness Survey,” workers’ financial stress is on the rise due to cash flow and debt challenges, supporting adult children and helping parents. Many workers say they are struggling to keep up with their bills and would not be able to cover an unexpected significant expense.

“As a result, we believe that employee anxiety will continue to mount without a greater emphasis on increasing savings and improving longer-term financial well-being,” the report says. “Stressed employees are nearly three times as likely to say they expect to spend the majority of their time ‘working in retirement’ because they’ll need to financially. We foresee critical issues for organizations if the root causes of this financial stress are not addressed.”

PwC says that while 80% of employers report having a financial wellness program, some of these programs are still primarily focused on retirement savings and fail to address the wide variety of financial issues that workers are grappling with every day. As well, they do not offer workers an opportunity to sit down one-on-one with a financial adviser.

“Employees crave the element of human interaction,” PwC says. “Successful financial wellness programs find the optimal way to shape the relationship between technology and human interaction, delivering the motivation employees need to achieve their goals.”

As Kent Allison, a partner with PwC, tells PLANSPONSOR, the vast majority of employers may believe they offer an effective financial wellness program, but only 24% of workers say their company offers such a program. The reason for this disconnect is because many companies have simply renamed their retirement planning education as financial wellness, and in other cases, employees don’t know that a financial wellness benefit is being offered, Allison says.

Companies need to step back to ensure they are offering holistic financial wellness programs that address the myriad of issues facing employees, including saving for education, paying down debt, insurance, etc., Allison says. Then they have to ensure that they are delivering this information on an engaging digital platform that explains to workers which benefits suit their needs, he says.

PwC’s survey asked 1,686 full-time employees what financial wellness means to them. Thirty-four percent said not being stressed about their finances, 18% said being debt-free, 16% said having money to cover unexpected expenses, 16% said the financial freedom to make choices to enjoy life, and 12% said being able to meet day-to-day expenses—but only 4% said being able to retire when they want to. Clearly, retirement is not top of mind.

By generation, the top financial concern for Millennials (62%) and Gen Xers (55%) is not having enough money to cover unexpected expenses. For 52% of Baby Boomers, it is not being able to retire when they want to.

Asked what could help them achieve their financial goals, for both Millennials (31%) and Gen Xers (25%), it is better job security. Boomers say it is both lower health care costs (27%) and a rising stock market (24%). All generations think they are doing worse financially compared to prior generations, with this being the case among 62% of Millennials, 46% of Gen Xers and 40% of Boomers.

Less than half of each generation says their compensation is keeping up with the cost of their living expenses, with this being true for only 26% of Millennials, 36% of Gen Xers and 42% of Boomers.

Younger workers are more likely to say their loyalty to their company is influenced by how much the company cares about their financial well-being, with this being the case for 46% of Millennials and 44% of Gen Xers, but only 40% of Boomers.

What Workers Are Looking For

Asked what benefit they would like to see added in the future, 27% say financial wellness programs with access to unbiased counselors, 26% say a student loan repayment benefit, 17% say help understanding and using their benefits, 16% say identity theft and credit protection and 8% say mobile access to benefits.

By generation, both Gen Xers (30%) and Boomers (28%) want a financial wellness program the most, while the priority for Millennials (37%) is a student loan repayment benefit.

The percentage of employees who have used services from their employers to help with their personal finances has been steadily rising since 2012, from 51%, to 71% in 2019.

However, workers don’t tend to use these services on an ongoing basis. Rather, it is when they have to make a financial decision (35%) or face a financial crisis (26%). Fifty-seven percent want these services to enable them to make their own decisions, but to include a counselor to validate those decisions.

Nineteen percent of workers are providing financial support for their parents or in-laws, and 42% of parents with children age 21 or older are financially supporting them.

The percentage of employees who find it difficult to meet their household expenses on time each month spiked form 37% in 2018 to 49% in 2019. Conversely, the percentage of employees who would be able to meet their basic expenses if they were out of work for an extended period of time fell from 47% to 31% in that time.

Fifty-two percent of Millennials, 43% of Gen Xers and 31% of Boomers have less than $1,000 saved to deal with an unexpected expense, and the percentage of employees who consistently carry balances on their credit cards rose from 49% in 2019 to 59% this year. Among this group, 37% find it hard to meet their minimum payment each month.

Twenty-nine percent of employees use their credit cards for monthly expenses because they cannot afford them otherwise.

Given all of these factors, it should not come as a surprise that the percentage of people who find it stressful dealing with their finances soared from 47% in 2018 to 67% in 2019. Thirty-five percent say their finances are distracting them at work.

For thirty-two percent, financial worries are impacting their health, and the same percentage says it is impacting their relationships at home. Twenty-one percent say it is impacting their productivity at work, and 10%, their attendance at work.

Sixty-eight percent of stressed workers have less than $50,000 saved for retirement, and 56% expect they will dip into their retirement savings before leaving the workforce.

Asked about their biggest retirement concerns, 51% say running out of money, 28% say health care costs, 25% say not being able to maintain their standard of living, 25% say not being able to meet monthly expenses, and 24% say health issues.

Forty percent plan to postpone their retirement, 50% plan to work part-time in retirement, and 32% plan to work full-time.