A survey by Greenspring Advisors conducted during May 2019, with the aim of providing a comprehensive, multi-dimensional assessment of employee perceptions about their financial well-being, found mid-career employees (ages 35 to 55) are in the toughest position.
Respondents in this age group exhibit the lowest levels of confidence in their ability to make good financial decisions (43%), the ability to retire on time (15%) and are struggling the most with debt (49%). They are also most likely to have no emergency savings (33%).
Not surprisingly, the survey found every financial measure improves as employees make more money. The lowest-paid employees exhibit the highest levels of stress (65%) and debt management issues (67%), but the lowest levels of confidence in short-term and retirement savings, and keeping pace with compensation and cost of living (75%). Employees making less than $50,000 are the most “at-risk” group.
There were large differences between men and women based on survey responses. Women are 27% more likely to experience financial stress, 35% less confident in making financial decisions, 33% less likely to feel confident in managing debt and almost twice as less confident in their ability to retire. They are also less likely to have an emergency fund and have lower levels of short-term and retirement savings than men.
Across the board, 45% of employees report feeling financial stress regularly. And, those who do regularly feel financial stress are 16% less likely to be saving for retirement and 51% less likely to have an emergency savings fund than those who are not feeling financial stress regularly.
Only 24% of employees surveyed say they have a written financial plan. Less than half (47%) of all employees say they are “extremely” or “very confident” in their ability to make good financial decisions. Men (57%) are more likely to express a high confidence level than women (40%). Only 43% of mid-career employees are confident in their financial decision-making, compared to 48% early- career and 56% of late-career employees. Those making less than $50,000 (35%) are less confident than employees making between $50,000 and $100,000 (48%) and 48% less than those making $100,000 to $250,000 (57%).
Thirty-six percent of employees cite retirement as the most important financial goal, followed by budgeting and debt management (27%) and overall financial planning (22%). However, budgeting and debt management was more than three times as important for younger workers (36%) than older workers (11%).
“Not being able to retire when I want to” (30%) and “Not having enough emergency savings” (21%) are the two biggest financial concerns for employees, the survey found. Not having enough emergency savings is a higher concern for women (25%) than men (15%). And, 17% of those making less than $50,000 are concerned about not being able to meet current monthly expenses.
Only 67% of mid-career employees have an emergency savings fund, fewer than either their early-career (73%) or late-career counterparts (77%). And, though the survey found more than 70% of employees overall have an emergency savings fund, 53% of respondents have less than $5,000 in emergency savings.
When it comes to managing debt, (63%) of men are “extremely or very confident” that they have their debt under control, compared to 45% of women (45%). Only 49% of mid-career employees feel “extremely or very confident,” and only one-third of those making less than $50,000 say the same. And, the survey found 37% of those making less than $50k have more than $10,000 in student loan debt.
According to the survey, 13% of women have taken a loan or hardship withdrawal from their defined contribution (DC) plan in the last 12 months, compared to 9% of men. More late-career (14%) and mid-career (13%) employees report taking a loan or hardship distribution than early-career (7%) employees. And, 14% of employees earning less than $50,000 have done so in the last 12 months.
More than 90% of employees of all ages say they want a second opinion on financial decisions or want someone to tell them what to do.
All of these findings indicate that when crafting financial wellness benefits, employers should pay special attention to the needs of employees that are underserved or at-risk—women, mid-career (Generation X) and low-income employees, according to Greenspring Advisors. It suggests that one way plan sponsors, providers and advisers should enhance the support and resources they offer is by creating curated “learning pathways and communities” that bring together services, resources and content in an efficient and organized way that makes it easier for people to engage and learn. “Often, plan sponsors, plan providers and advisers offer access to tremendous [and perhaps overwhelming] amounts of content but without making it easy for people to find and use these resources,” the survey report says.
As an example, Greenspring says, a learning pathway for women could bring together on-demand webinars, e-learning courses, articles and highly specific one-on-one sessions that focus on areas of concern for women such as building emergency savings, paying down debt, planning for longevity and developing a written financial plan.
For all groups, ongoing engagement could be personalized even further through targeted email automation notifying each person when new resources become available. Taking this idea one step further, sponsors, providers and advisers could create communities that bring together employees who have similar goals and common concerns to help them get specific information and to build skills while fostering collaborative learning, peer support, mentorship, etc. The communities could provide a more personalized experience and connect like-minded employees with one another.
Greenspring also suggests to make conflict-free “on-demand” advice available to employees from a qualified and credentialed professional; identify ways to help employees develop a written, actionable financial plan; and for retirement savings, adopt automatic retirement plan features.The survey received responses from 1,872 U.S.-based employees of Greenspring Advisors corporate retirement plan client base. The survey report is here.
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