The Burdens Of Debt

Declaring War on Debt

The emerging pursuit of financial-wellness echoes into the workplace, revealing a growing malaise

by Ken Verzella

Mr. Verzella is Head of Financial Wellness for Massachusetts Mutual Life Insurance Company, Springfield, Ma. Visit

Debt never sleeps.

Debt from credit card interest compounds every day, every week, every month, eating away at your financial foundation like termites gnawing away wood. Left unmanaged, debt can steal money for financial goals such as buying a home, saving for college, planning for retirement, eventually eroding your lifestyle and even delaying your dreams.

Consumers’ debt problems are reverberating at work. Employers worry that debt is hurting workers’ productivity on the job and cite credit card and other consumer debts as the No. 1 reason their employees are struggling financially, according to the MassMutual Workplace Financial Wellness Study1. It’s a root cause for why financial wellness programs are springing up at the workplace, including and especially debt management programs.

The numbers are daunting. Data collected from workers who have used MassMutual’s MapMyFinances financial wellness tool, which helps workers prioritize their personal financial needs and choices, shows that the average user has $39,176 in debt as of January 20202. For some demographic groups, the problem is worse.

Men, for instance, report having an average debt balance of $42,405 compared to $34,788 for women, data from MapMyFinances indicates. Those who report having student loan debt say they have an average loan balance of $42,075, not including any consumer or other indebtedness. The older the workers, the higher average debt reported.

Employers Respond

The sheer scope and depth of the problem is motivating many employers to do what they can to help. Forty-three percent of employers report being concerned about employees’ credit card and consumer debt and 35% say they worry about workers’ student loan debt, according to the MassMutual financial wellness study. Those concerns tend to be exacerbated for smaller employers who are typically closer to their workforce.

Employers, especially those who sponsor retirement savings plans such as 401(k)s, are turning to financial advisors for assistance in helping employees battle their burgeoning debts and improve their overall financial wellness. Fortunately, there are ways for employers to help employees tackle their debt challenges through a variety of resources, many of which are available at little or no cost to the employer or employee:

Financial Education

Many retirement plan providers offer financial educational programs in the form of seminars, webinars or even one-on-one counseling for employees. These programs can range from retirement planning and making the most of Social Security to managing your money and handling debt.

Educating employees about financial issues can help them make better decisions and overcome shorter-term financial problems that can lead to bigger long-term issues. Check with your retirement plan provider to see if the firm offers education specialists who can provide educational sessions at the workplace.

Financial Wellness Tools

There is a plethora of financial planning tools available through the workplace with the goal of helping users make better decisions about their employee benefits and overall financial wellness. The best tools provide users with a personalized financial wellness score to help them assess their overall financial situation and then draw up a game plan with simple, actionable steps to improve their score over time. Understanding that not every employee can afford to take action to meet every financial need, any tool worth its salt should prioritize needs and steps for each employee based on his or her family situation and budget.

While healthcare coverage is typically a top priority for most people, other financial needs such as debt reduction; retirement savings; life, disability, accident and critical insurance coverage; college savings and others need to be prioritized with an eye towards enhancing the workers’ overall financial security. The priorities should update as users input new data to reflect life changes such as the birth of children, children entering college and others.

Debt Management

As part of financial-wellness programing, some employers are offering services to help employees better manage and potentially extinguish their debt. These programs educate employees about debt, from avoiding high credit-card interest rates to securing a low-cost mortgage.

By learning more about the pitfalls of debt, including both good debt and bad debt, employees can improve their household balance sheets over time and avoid financial problems caused by falling deeply into debt.

Emergency Savings

Three out of four American workers lack enough savings to cover at least six months of expenses in case of an emergency, according to MassMutual’s financial wellness research. One in four workers has less than a months’ savings or no savings to speak of.

The lack of emergency savings can create bigger problems. Not having enough money to cover a car repair, broken appliance or emergency room visit can trigger bad financial habits such as going into credit card debt, missing payments for other financial obligations or even drawing money from retirement savings.

The lack of emergency savings can simply discourage many workers from even contributing to their retirement plan. Let’s face it, if you’re worried about making ends meet every month, it’s hard to even envision retirement never mind save for it.

That’s why more employers are starting to offer emergency savings accounts to complement retirement savings plans, allowing workers to divert some of their paycheck to build emergency savings over time. It’s another way employers are helping workers improve their financial security.


Some companies offer not only education but resources to help workers better manage their income and expenses on a monthly basis. Introducing discipline and prioritization to the monthly budgeting process can help many people get on track to achieving their financial goals, avoid debt and be better prepared for emergencies. It can even help some people find money to save for retirement.

Managing College Loan Debt

More than 40 million Americans are burdened by a total of $1.6 trillion in student loan debt3, the Federal Reserve reports3, which amounts to an average of $37,000 in outstanding indebtedness per worker upon graduation. So much debt can siphon money needed to save for retirement, not to mention more immediate financial needs.

Some employers elect to provide student loan repayment assistance to employees with the goal of enhancing their employees’ overall financial wellness and freeing up money for longer-term financial goals...

Companies are helping workers combat the problem of student loan indebtedness by offering two types of loan management programs: loan refinancing and loan repayment.

The most effective student loan management programs provide different levels of support for student loan indebtedness, both of which help borrowers better manage their student debt, including some that enable employers, parents or both to provide financial assistance to extinguish debts. Some employers elect to provide student loan repayment assistance to employees with the goal of enhancing their employees’ overall financial wellness and freeing up money for longer-term financial goals.

Some programs help borrowers better manage their loans by providing consolidated reports, including payment updates. That can help workers determine if it makes sense to consolidate their loans through refinancing, another program some employers are offering. Doing so can help borrowers to potentially pay off their loans faster and save thousands of dollars in interest.

Disability & Life Insurance

A disabling illness or accident or untimely death suffered by a breadwinner can pose an immediate threat a family’s financial security. The inability to pay for basic living expenses if someone becomes disabled is one of American workers’ top five financial concerns, LIMRA reports4. Yet, eight in 10 consumers don’t own disability insurance.

Similarly, six in 10 Americans own life insurance but one in five of those with insurance are underinsured, according to the Insurance Information Institute5.

Lack of life and disability coverage compounds the problem of insufficient savings to cover three to six months’ of living expenses. The good news is that employers can make both life and disability insurance available on a voluntary or employee-paid basis. Purchasing life insurance on a group basis is typically affordable, allowing workers to protect their incomes against disability or premature death.

Critical Illness Insurance, Accident Insurance

One of the causes of indebtedness are critical illnesses or accidents requiring medical attention. Such medical issues can be expensive and can pose a severe financial challenge, especially for those of modest financial means.

A critical illness, like a heart attack, stroke or invasive cancer, can have an emotional, physical and financial impact on a worker as well as his or her family. Group critical illness insurance can help cushion the financial impact of life’s unwanted surprises. Critical illness coverage provides a lump-sum benefit, paid directly to the employee, to help cover medical costs, mortgage payments, childcare, or even groceries.

Meanwhile, emergency rooms treat more than 40 million injuries a year across the country, according to the U.S. Centers for Disease Control (CDC)5. More than 700,000 of those injuries are due to people age 65 and older falling, often leading to head trauma or a hip fracture, the CDC reports6.

Unfortunately, a medical emergency can quickly turn into a financial emergency, especially for those who have little or no savings. Group accident insurance provides a lump- sum benefit should the insured be unable to work due to a covered accident, helping cover medical insurance deductibles and co-pays, down time from work and other expenses.

Like life and disability coverage, both group products, critical illness insurance and accident insurance are available to employees on a voluntary basis. Because the policies are offered at the workplace, they are typically priced at reasonable group rates.

Health Savings Accounts (HSAs)

Healthcare expenses, which can easily run into five and even six figures for treatment and care of serious medical or chronic conditions, are a big concern for many people, even those with healthcare plans. Workers covered by high-deductible healthcare (HDH) plans typically are responsible for more of the cost of care before their healthcare insurance kicks in.

HSAs enable workers who are covered by HDH plans to put aside money on a tax-favored basis for eligible healthcare expenses during their working years as well as retirement. Contributions to the account may be made by the employee, the employer or both and the account is owned by the employee.

Contributions to HSAs carry over year-to-year, can potentially be invested and earn interest for greater savings, and can be used tax free for eligible medical expenses in retirement, when healthcare and its costs are often at a premium. However, no additional contributions can be made once the employee who owns the account enrolls in Medicare or is no longer working.

Different Approaches

There are many approaches to preventing, reducing and even eliminating debt, all of which are being introduced to some extent at the workplace. The efforts are part of the larger trend of employers attempting to help workers improve their overall financial wellness, which is a cause of consternation on the part of business managers and owners.

Of the many financial problems employers cite as problematic for their workers, debt is easily the biggest. The corrosive effects of debt, especially over years and even decades, create both short- and long-term financial troubles for workers as they struggle with their monthly bills and forgo important financial goals such as saving for retirement.

Financial advisors who support retirement plans can make a difference. Help stop debt and its deleterious impacts on financial lives by working with employers to introduce debt-reduction, management and avoidance programs at the workplace.

Debt never sleeps. But by waking America’s workers to its dangers and helping them slay the debt dragon, you can establish a financial legacy that will endure longer than the biggest credit card balance.




1MassMutual Financial Wellness Study,
22019, MassMutual proprietary MapMyFinances data
3Consumer Credit Outstanding, Federal Reserve,
4Disability Insurance Awareness Month – Only 20% of Consumers Own Disability Insurance Despite Almost Half Saying They Need It, LIMRA,–only-20-of-consumers-own-disability-insurance-despite-almost-half-saying-they-need-it/
5Insurance Information Institute, 2018,
5Centers for Disease Control and Prevention,
6Centers for Disease Control. Home & Recreational Safety,