The FINANCIAL -- Released on June 1, a new study finds that 56 percent of employees are stressed about their financial situation.
The latest Bank of America Merrill Lynch Workplace Benefits Report reveals that among those who are stressed, 53 percent say it interferes with their ability to focus and be productive at work. The study also found that employers can play an important role in improving the financial lives of their employees. Of employees who participate in a retirement savings plan, 67 percent say their employer was influential in getting them to save for retirement.
“Stress over personal finances extends into the workplace, impacting employees’ productivity, health and overall well-being,” said Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America Merrill Lynch. “This confirms our dedication to working with employers to help employees navigate financial concerns and improve their financial wellness.”
Based on a nationwide survey of more than 1,200 employees participating in 401(k) plans at companies of all sizes, the report explores attitudes of employees on key financial topics, examines their needs and concerns, and offers insights for employers to drive employee engagement. Key findings include:
Sixty-four percent of employees are worried about running out of money in retirement.
Millennial employees (67 percent) are more than twice as likely as baby boomers (32 percent) to report that financial stress interferes with their ability to focus and be productive at work. Millennials dedicate the most time each week at work to their personal finances (four hours on average), double that of Gen Xers and four times that of baby boomers.
Forty-three percent of employees spend an average of three or more working hours per week on personal finances, and 21 percent spend five hours or more.
Nearly three in five employees say financial stress has a negative effect on their physical health. This stress wears most heavily on the health of younger employees (68 percent of millennials vs. 51 percent of baby boomers).
While optimistic, employees still concerned about their financial futures
For the second year in a row, the majority of employees indicate that they are optimistic about their financial future. Despite sustained optimism, however, many employees still have concerns about their financial security. In particular, women surpass men with their worries about having to work longer than they had hoped (61 percent of women vs. 51 percent of men) and needing to support family members (46 percent of women vs. 38 percent of men).
The study finds that major life events can have a profound impact on employees’ financial situations, compounding the financial stress. Employees cite buying a home, losing a job and dealing with a serious illness among the life events that have the greatest impact on their finances. Further, the study reveals gaps in financial preparation for such events, including 29 percent of employees who were not prepared for the financial consequences and 47 percent who underestimated the financial impact.
Employees call on employers for help managing finances
This year’s study again finds that employees look to their employers to help manage several aspects of their financial lives. Half of employees rank saving for retirement as the financial matter they need help with the most. The study also found that support from employers is paying off.
Half of employees say they would take a more active role in managing their finances if they had a regularly scheduled financial review (50 percent) or a personalized action plan (49 percent).
Eighty-six percent of employees would participate in a financial education program provided by their employer.
At least 40 percent of employees would like their employers to take a more active role in supporting their financial lives, such as bringing in financial professionals, offering education tailored to their age and finances, and providing access to a personalized financial plan.
“Employees are looking to their employers as a resource in helping them manage a broad range of financial matters,” said Sylvie Feist, director of financial guidance services at Bank of America Merrill Lynch. “Employers can best meet this call for help by offering programs that address a wide range of financial needs, such as education on building better money habits and access to financial advisors who can offer personalized guidance and more holistic services.”
Health care costs remain among employees’ top financial concerns
Rising health care costs continue to be a key source of stress for employees. A growing number of employees indicate they have experienced an increase in health care costs, which is up 10 percentage points since 2015 (79 percent in 2016 vs. 69 percent in 2015). Among employees who have experienced increasing health care costs, 56 percent are contributing less to their financial goals as a result.
Amid growing concerns over health care costs, employees place great value on the health benefits provided by their employer. In fact, employees rank their health benefits as their top employer benefit (40 percent), followed by their 401(k) plan (31 percent).