Kevin Crain is Head of Workplace Solutions Integration for Bank of America. Surya Kolluri is Managing Director, Thought Leadership for the Retirement and Personal Wealth Solutions at Bank of America. Sheila Gorman is Director, Thought Leadership for the Retirement and Personal Wealth Solutions at Bank of America. Opinions are the authors’ own.
The last decade has seen important growth in employment-based financial wellness programs, which have become an integral part of employer benefits offerings. Yet the pandemic has brought employee financial well-being into sharper focus, particularly because workers face greater stress and demands on their time, straining their overall sense of wellness.
Clearly, more needs to be done to ensure employees feel supported at work – financially, physically, emotionally and mentally. In fact, our recent Workplace Benefits Report for 2020 identified that 62% of employers feel “extremely” responsible for their employees’ financial wellness today, compared to 13% in 2013. Employers’ increased responsibility is even greater with respect to the retirement front, with 80% feeling very or extremely responsible for helping employees prepare for retirement healthcare needs and costs, up from 22%; and 78% for preparing employees for retirement income needs, up from 33%.
This report also reported on trends in workplace financial benefits and wellness, tracking both employee and employer sentiment. Based on a nationwide survey of 996 employees and 808 employers, key findings include:
- Financial wellness and productivity are interconnected. Eighty three percent of employers believe employee financial wellness programs and tools help to create more productive, loyal, satisfied and engaged employees. This works both ways, as 57% of employees feel their well-being has a great impact on productivity. When asked what factors contribute to their overall sense of well-being, employees cited physical (51%) and mental wellness (54%), only slightly more so than financial (49%).
- Financial wellness has declined since 2018, though it does vary by generation. In March of 2020, 49% of employees rated their financial wellness as good or excellent, down from 55% in 2019 and 61% in 2018. Fewer Gen Z (41%), Millennial (41%) and Gen X (38%) employees rate their financial wellness as good or excellent today, compared with 60% of Baby Boomers and those in the Silent Generation.
- Professional financial advice and holistic support remain top priorities. Fewer than 4 in 10 employees say they have made significant progress toward specific personal financial goals, and the main obstacle cited is a lack of disposable income after monthly expenses. Employees most wanted advice from a financial professional with whom they can discuss a range of topics, and they also wanted flexibility in terms of how they accessed the advice.
- Debt is a multifaceted challenge. Most (82%) of employees reported carrying debt, with the most common types being credit card (50%), mortgage (46%), and student loans (21%). Unfortunately, debt can erode a sense of overall well-being: 59% of employees say they lack a high level of control over their debt, and 36% say debt affects their ability to achieve financial goals.
Fortunately, the range of topics being addressed by workplace financial wellness programs has also increased substantially over time. Such programs today, compared to 2013, focus on:
- Saving for retirement (81% vs. 70%)
- Planning for healthcare costs (71% vs. 38%)
- Budgeting (63% vs. 14%)
- Saving for college (55% vs. 13%)
- Managing debt (54% vs. 15%)
Our report also differentiated financial wellbeing of working women versus men. We found that 41% of women rate their financial wellness as good or excellent, compared to 58% of men. Combined with the fact that women often earn less than their male counterparts, this implies that women may be more likely to take time out of the workforce to raise a child or provide care for a family member, and they typically live longer. All of these realities underscore the need for financial wellness programs tailored to women’s unique financial journeys and life paths.
Other financial wellbeing differences between men and women include:
- Women are more likely to have credit card debt (56% vs. 43% of men) and student loans (30% vs. 11% of men), and are more likely to feel a lack of control over their debt (67% vs. 49% men).
- Women are more than twice as likely to rank paying off credit card debt among their top financial goals (21% vs. 9% of men).
- Women are nearly twice as likely to cite lack of cash after monthly expenses as a primary challenge to achieving financial goals (47% vs. 27% of men).
The key takeaway from this report is that employers are making great progress in providing wellness programs to address the diverse needs of their workforces. Yet more remains to be done, as the pandemic creates new challenges to maintaining financial wellness.
Views of our Guest Bloggers are theirs alone, and not of the Pension Research Council, the Wharton School, or the University of Pennsylvania.
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