Employers take note: Your workers may be feeling particularly dispirited about their personal financial situation this year.
Of course, not all employers will take notice of such.
Recent research by Willis Towers Watson (WTW) found only 23% of employers ranked financial well-being as a top priority for their worker well-being programs over the next three years.
Yet, according to a newly released WTW survey of 10,000 U.S. employees, two-thirds (66%) of them ranked financial well-being as the area where they want the most support from employers.
Indeed, a vast majority (88%) of employees said they are struggling to meet basic daily living costs. Among that group, more than half said they were “extremely worried” about their ability to make ends meet.
The number of employees who reported living paycheck to paycheck has climbed from 37% in 2020 to 44% this year, while the number of employees who said they were worse off financially than a year earlier has more than doubled from 2019 (16%) to this year (33%).
Personal finance’s impact on employee morale
Why should employers care? In part it may depend on the value assigned to workers being fully present in performing their roles. A majority (59%) of employees said money concerns are having a negative impact on their overall well-being, resulting in higher levels of stress and anxiety as well as missed medical appointments.
“High inflation combined with the aftermath of a once-in-a-generation pandemic is causing many employees to feel overwhelmed and discouraged about their financial situation,” said Mark Smrecek, senior director of retirement for WTW. He recommended that companies should educate employees on available resources to close financial gaps.
The concerns are especially evident among older workers. Nearly half (46%) of those age 50 or higher expect to work past 70, a sharp rise from 36% just two years ago and 30% before the pandemic.
Noting the “clear disconnect” in priorities between employees and employers, Beth Ashmore, managing director of retirement for WTW, said, “Employers have an opportunity to align their focus with employee value, cost pressures, and talent objectives to address how their benefit programs can help employees juggle their finances today while being on track for retirement.”
Postponing retirement
Right now, though, the unfortunate trend is toward employees not being ready for retirement. In 2019, 72% of employees said they were somewhat or very confident they would be able to live comfortably 15 years into retirement. By 2022, that number had shrunk to 65%. This year: 56%.
At the same time, the gap between what workers think they should save, and what they actually do save, is widening. On average, this year’s survey respondents thought they should have a 17% savings rate, but said they were putting away only 10%, or a 7-point gap. Five years ago, the gap was only 4%.
By gender, men were much more likely (60%) to say they felt they were on the right track for retirement than were women (42%).
Interestingly, there wasn’t much difference in retirement readiness among the three different age groups shown in the survey results — under 40, 40-49, and 50+, for which 54%, 52%, and 49%, respectively, said they were on the right track.