Holistic Planning

Financial Wellness Programs Foster a Thriving Workforce

Across generations, all employees agree that ‘personal finances’ is their number one source of stress

Excerpted from a new study from MetLife, and reprinted with permission. Read the entire study here.

Employees have always brought personal stress into the office. But as work and life continue to blend, employees’ lives outside of work – and the stress that comes with them – makes more of an impact on their work life than ever before. Employers have a vested interest in helping employees manage their personal stress, ensuring that stress doesn’t affect their ability to thrive in the workplace. Across generations, life-stages, and socioeconomic statuses, all employees agree that personal finances is their number one source of stress.

Financial stress can lead to distraction at work, absenteeism, and high turnover. These challenges can have a significant financial impact on a business’ bottom line. For a company of 10,000, this can mean 1,922 hours and $28,830 in lost productivity every week. Overall, employers report $250 billion lost each year due to stressed employees at work.1
The stress that employees feel is significant — but so is the disconnect between their relatively strong perceptions of their finances and their actual financial wellness.

To help employees protect their families and plan for their short- and long-term goals, many employers offer a range of medical, voluntary, and retirement-related benefits. Yet, financial stress remains for employees. Employers are now recognizing they should help employees holistically connect the dots between these benefit offerings, so they understand how to use them to improve their financial wellness. Financial wellness programs are designed specifically to address this emerging need.

By taking a holistic approach, these programs can not only maximize the impact of employers’ investments in their benefits programs, but help employees meet their short- and long-term financial goals, too. Financial wellness programs are not only in high demand, but, when delivered effectively, can serve as a differentiator in employee satisfaction, productivity, and loyalty.

At MetLife, we are committed to supporting financial wellness in the workplace. In our 17th annual U.S. Employee Benefit Trend Study, we’ve uncovered insights that can help employers understand the positive impact financial wellness programs can have and how they can develop best-in-class programs to meet their employees’ needs.

Employees’ Financial Perceptions Don’t Match Reality

The majority of employees report they are confident about their personal finances, however, personal finances remains their number one source of stress. What explains this paradox? While employees say they are confident, their actions and circumstances do not match their perceptions. Many are not successfully managing their short-term expenses, and therefore, are not on track to reach their long-term financial goals — causing a sense of financial insecurity that leads to stress.

This gap between what employees say and the reality of their day-to-day lives highlights the importance of educating employees and providing them with the right resources and tools to assess their true state of financial health.
This disconnect is particularly noticeable among younger employees, who relative to their older counterparts, have a higher rate of overlap in feeling both in control of their finances and living paycheck to paycheck.

Employers are now recognizing they should help employees holistically connect the dots between these benefit offerings, so they understand how to use them to improve their financial wellness...

This perception gap inhibits employees from truly understanding their financial situations and taking the appropriate action to plan and save.

Employees’ actions don’t match their desire to save for the future

Only 60% of employees have a budget or plan for how to spend their money on an ongoing basis — and actually stick to it. Older workers (Gen X and Boomers) and women in particular are less likely to have an ongoing budgeting plan in place.

Many employees may prioritize their short-term needs at the expense of their long-term goals
Employees are not only failing to save enough of each paycheck to meaningfully contribute to their retirement goals, but they are also often dipping into retirement plans to cover immediate financial needs.

Most employees who took a loan from their defined contribution plan say it was to pay off unplanned general expenses, suggesting that employees are not able to fully protect themselves against unexpected financial shock, whether it’s a flooded basement or a broken bone.

Medical bills are a significant burden, showing there is opportunity for employers to offer voluntary benefits—and educate employees on their value—to help ease out-of-pocket costs.

Immediate needs and future planning often compete for the same dollars, because of this, most employees — 63% — are behind on their retirement savings goals, even among those older employees nearing retirement. Many younger employees haven’t even begun to put money away for retirement. Surprisingly, among employees who are confident, only half are on track or have already reached their retirement saving goals. Due to their financial situation, employees are increasingly postponing retirement.

Gen Z and Millennials

Financial Wellness Programs Benefit Employees and Employers

Employers have a vested interest in improving the financial health of their employees. Employees who are financially unprepared to deal with both short- and long-term needs are more likely to be stressed. Through financial wellness programs, employers can help employees get a better handle on their finances in order to mitigate their financial stressors. More broadly, employees who are on track in their finances tend to be more productive, engaged and loyal — reflecting top business objectives for employers today.

As work and life continue to blend, employers need to help alleviate the stress employees feel, so they can thrive in and out of the workplace. Financial wellness programs can significantly contribute to these objectives. It’s a win-win for both employees and employers.

Many employees expect their employers’ help with their financial wellness — particularly younger employers agree they have a role to play. By creating holistic financial wellness programs that tie together benefits and guidance, employers can set their employees up for continued financial success, while at the same time, advancing their own organizational goals.

 

To learn more about how financial wellness programs are win-win for employees and employers, download the full study.