Bank of America (BoA) has released its 10th annual “Workplace Benefits Report,” examining recent trends in financial wellness.
As the effects of the COVID-19 pandemic emphasize the importance of well-being, the survey found more employers are committed to ensuring their participants feel secure with their financial status. Sixty-two percent of plan sponsors say they feel “extremely” responsible for their employees’ financial wellness—a big jump from just 13% in 2013.
This response grows when employers also think of their employees’ long-term future, added Lorna Sabbia, head of retirement and benefit plan services at BoA, during a recent webinar. “Employers’ sense of responsibility is even greater when it comes to focusing on retirement-related progress,” she said. For example, when it came to retirement health care needs/costs, 80% of sponsors say they feel either very or extremely responsible.
Yet, even as employer interest in helping their employees grows, workers aren’t reporting better financial security. Forty-nine percent of employees say they are feeling financially well today, down from 61% two years ago. However, 59% say they don’t have control over their debt, which could contribute to reduced feelings of financial wellness.
Being strapped for money after paying off monthly expenses is likely contributing to these feelings as well. According to the report, 38% of employees say they don’t have spare money after monthly bills. Eighteen percent said they are focused on other non-financial needs that are more pressing.
Women, who are more likely to halt their careers for caregiving and are still subjected to the gender pay gap, reported feeling lower levels of financial wellness than men. Forty-one percent said they would rate their financial wellness as good or excellent, while 58% of men say the same.
The survey also found slight disparities in the top three financial concerns for men and women. While both groups highlighted retirement savings and sufficient funds to pay for unexpected expenses as top goals, women were more likely to add paying off credit card debt as their third goal, while men were likely to be concerned about paying off a mortgage.
Among age groups, Baby Boomers led the way with 60% rating their financial wellness as good or excellent. Forty-one percent of Generation Zers and Millennials reported the same, with Generation Xers coming in last at 38%. Kevin Crain, head of workplace financial solutions at BoA, attributed these findings to that fact that Gen Xers are more likely to be in the midst of their careers while handling caregiving, aging parents and paying rent or a mortgage. “[They] are feeling a bit of a squeeze in terms of what’s going on in their lives,” he said.
Each cohort had distinct financial focuses, which BoA attributed to their members’ current lifestyle. Gen Xers said saving for retirement, paying off credit card debt and growing savings to pay for unexpected expenses were their top three areas of concern. Gen Zers and Millennials listed paying off credit card debt, buying a house and growing savings to pay for unexpected expenses as their principal goals, while Boomers and the Silent Generation reported saving for retirement, paying off a mortgage and paying off credit card debt as their main focuses.
Similarly, feelings of progress when it comes to retirement savings differed across generations. As Boomers and the Silent Generation enter and live in retirement, more of their members are likely to add to their retirement savings. Fifty percent say they feel progress in saving for retirement, compared with 23% of Gen Xers and 21% of Millennials and Gen Zers.
To increase financial well-being, more employees are seeking advice from retirement industry professionals. Given a list of financial resources, 41% said advice from a financial adviser, planner or accountant was most important to them. Thirty percent said they would like information on retirement plans; 28% are looking for financial products/services that help employees; 27% want online financial tools or calculators; and 27% are interested in developing financial skills and good financial habits.
More employees are also willing to use financial tools and resources from a third-party instead of their employer. Forty-seven of respondents said they would use retirement income planning tools from a third-party professional; 39% said they would use a health savings account (HSA); 37% would use health care cost estimators; 36% would use Social Security withdrawal education; 35% would use access to preferred checking and savings accounts; and 35% would use legal services.
If employers are implementing a workplace financial wellness program, BoA recommends incorporating a step-by-step plan and progress reports; a way to track finances, including debt; and streamlined information on one platform.
“[Employees] want tools and resources to help them stay on that track towards financial wellness, but one size does not fit all,” said Steve Ulian, managing director at BoA. “Some need a road map; others want progress reports. People are on different timelines on that journey.”
« Sizable Settlement Reached in OSF Health ‘Church Plan’ Lawsuit