A deep dive into financial wellness

Ninety-two percent of employees want more consistent care at work from their employers, and 79% want more support in their personal lives, according to the results of financial services company MetLife’s 22nd Annual U.S. Employee Benefit Trends Study. 

Employees who feel cared for by their employers are 60% more likely to plan to stay at their current organization for the next year and 55% more likely to feel productive in their jobs, per the study. Employees reported not feeling supported when dealing with unplanned financial stress, experiencing a mental health condition or becoming the primary breadwinner, however. The study used responses from two surveys — an employer survey that interviewed 2,595 benefits decision-makers and influencers and an employee survey with interviews from 2,809 full-time employees — to develop insights. 

“Against the backdrop of a permacrisis, this year’s study underscores the urgent need for employers to acknowledge the modern challenges that impact their workforce and take steps to support employees in new and bigger ways, resulting in more successful workplaces,” Todd Katz, executive vice president and head of group benefits at MetLife, said in a statement.

Employers generally seem to be turning to benefits to address employees’ needs and foster retention and attraction. 

The Employee Benefits Research Institute’s 2022 Workplace Wellness Survey found that most employees said they thought employers are at least partly responsible for their mental, emotional, physical and financial health and well-being.   

In the Business Group on Health’s annual survey of large employers last year, 80% of respondents said that access to mental healthcare was their top mental health focus. Of those surveyed, 77% said they saw increased mental health issues in the workplace. 

Employers that respond proactively to current events may attract the interest of job seekers as well. After the Dobbs v. Jackson Supreme Court decision that overturned Roe v. Wade, employers that announced changes to their benefits or openly voiced support for reproductive healthcare saw an 8% increase in clicks on job postings compared to listings for similar jobs at companies that didn’t make such proclamations, an August analysis by Indeed and Glassdoor found.

The number of 401(k) participants taking hardship distributions increased 36% year over year, Bank of America has reported.

Still, contributions remained steady and average balances are up, the bank said.

The data tells two stories, Lorna Sabbia, the organization’s head of retirement and personal wealth solutions, said in a statement: “one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals.” It shows the employees are understandably prioritizing short-term expenses over long-term saving at the moment, she said.

Bank of America’s report comes as plan sponsors weigh a new option to offer workers in-plan emergency savings accounts.

With the Secure 2.0 Act, Congress made non-highly compensated employees eligible for such benefits, in plan years beginning after Dec. 31, 2023, consulting firm Mercer explained in a report. Withdrawals from the accounts will have fewer restrictions than those from 401(k)s.

The shift comes after workers made it clear they want additional financial support from employers — support that goes beyond a raise.

Employees seem to be seeking a sense of financial security and stability, research shows. Many of those responding to a recent survey said they lack enough money for retirement. And in another survey, respondents said employers could offer financial wellness benefits and education to help mitigate that issue.

Earlier this year, HR pros said they’re doing just that. Nearly half of respondents to HR Dive’s annual survey said retirement benefits or contributions were part of their talent acquisition strategies. That offering saw the highest increase among a variety of total rewards package components; only 35% said retirement benefits or contributions were part of their recruiting strategy the previous year.

Employers will, of course, have to weigh costs. But one source previously told HR Dive that benefits that convey empathy, and that are truly meaningful, can help an employer differentiate itself in the job market.

Sponsored content

By Alight

Financial wellbeing is a crucial aspect of overall wellbeing, impacting every aspect of our lives from mental and emotional health to physical wellbeing. The 2023 Alight International Workforce and Wellbeing Mindset Study sheds light on the profound impact of financial stress on American workers, highlighting the need for personalized financial support and guidance.

Troubling times

Living paycheck to paycheck has become a harsh reality for many Americans, with 55% of U.S.-based employees reporting this struggle in 2023, up from 43% in 2022. This challenge is not limited to low-income earners; even those making over $100,000 a year find themselves in this predicament. Despite the growing awareness of the importance of emergency funds, only 45% of U.S. adults have set money aside, with less than half having enough to cover three months of expenses or a $1,000 emergency.

The impact of financial stress goes beyond just making ends meet; it affects mental health, with nearly one-third of employees reporting a decline in mental health due to economic uncertainties. Additionally, financial worries are the top stressor for over half of employees, directly affecting their overall wellbeing.

Seeking support

Employers are uniquely positioned to help improve their employees' financial wellbeing. Workers simply aren’t as engaged or productive when they are distracted by financial troubles and experiencing the many related challenges — physical, mental, etc. — and there couldn’t be a more compelling case for expanding financial benefits offerings and tools. However, there is often a disconnect between what employees need and what employers provide. While many employers focus on retirement planning, employees also express a need for support in areas such as managing debt, saving for education and establishing emergency funds.

How can employers ensure they are providing the tools, resources and guidance employees need to help reverse the downward financial spiral that is wreaking havoc on their lives? Technology and personalization play a key role in powering confident financial decisions, improving the employee experience and boosting engagement and retention.

Personalization brings prosperity

Personalization is key to addressing these diverse needs effectively. Employers can leverage technology to provide personalized financial planning tools, one-on-one coaching and tailored messaging. By offering a holistic financial wellbeing program, employers can help employees navigate financial challenges, reduce stress, and improve their overall wellbeing. According to research from The Josh Bersin Company, organizations that leverage the right wellbeing strategies are more than twice as likely to outperform their peers financially, five times more likely to have lower annual healthcare claim costs and do three times better at engaging and retaining their employees.

Alight offers a range of solutions to support employees' financial wellbeing, including budgeting tools, financial planning services and access to low-interest loans. These tools empower employees to make informed financial decisions and achieve greater financial security. By investing in their employees' financial wellbeing, employers can create a more engaged, productive workforce and improve overall organizational performance.

Financial wellbeing is a critical component of overall wellbeing and employers play a vital role in supporting their employees' financial health. By providing personalized financial support and guidance, employers can help employees achieve greater financial security, reduce stress and improve their overall quality of life.

To learn more about how Alight can help with financial wellbeing, visit Alight.com

Walmart is teaming up with Khan Academy to offer a free financial literacy course for company associates, customers and community members, according to an announcement from Walmart.

About 72% of U.S. adults report feeling stressed about money, according to the American Psychological Association’s Stress in America survey. Walmart’s financial literacy course is aimed at improving overall well-being, which includes physical, emotional and financial health.

“We know if someone is experiencing financial stress, it can lead to significant physical and emotional health issues, like heart disease, depression and more — it’s all connected,” Kim Lupo, Walmart’s senior vice president of global total rewards, said in the announcement.

“That’s why we have been and continue to be focused on providing access to tools and resources to support total well-being,” she said.

The virtual course includes articles, videos and exercises focused on personal finance skills. The learn-at-your-own-pace modules feature topics such as budgeting, saving, consumer credit, financial goals, loans, debt, insurance, investments, scams and taxes.

“We know from listening to our associates and customers that financial well-being is an important component to their total well-being,” Lupo said. “We believe offering these unique financial offerings will empower people to live their best lives — in and out of the workplace.”

Employees want more education programs, particularly around financial wellness and their retirement benefits, according to a recent report. Employers who work with financial advisors also listed employee financial literacy and employee investment recommendations as top issues.

Overall, employees are increasingly in favor of their employers being involved in their finances, particularly helping them through financial hardships. This includes helping employees to understand how to maximize their benefits and achieve financial wellness.

In turn, talent acquisition professionals are offering comprehensive total rewards bundles to draw workers. Several options are on the table, including signing bonuses, flexible work arrangements, public transportation or rideshare benefits, mental health or counseling coverage and education or apprenticeship programs.

To retire comfortably, American workers believe they will need $1.27 million saved, according to Northwestern Mutual’s 2023 Planning & Progress study — and while readiness is improving, a big disparity still exists between what workers think they will need to retire and what they’ve actually saved.

Savings expectations only continue to increase, as well; workers reported they would need $1.25 million saved last year to retire comfortably. But the average amount Americans have saved for retirement continues to rise “modestly,” according to the report, growing by 3% to $89,300 from $86,869 in 2022.

Generation Z remains most confident that they will be financially ready for retirement, while older generations are more pessimistic. More than half of Gen X say they will not be ready, and nearly half of millennials and baby boomers say the same, according to Northwestern Mutual.

That confidence also directly reflects on long people expect to work — a growing question as employers continue to grapple with succession planning and talent shortages amid an aging workforce.

Boomers, for example, on average plan to work until they are 71 years old, while Gen Z expects to be able to retire around age 60.

The report comes as recessionary concerns — and continued pressures in the wake of the pandemic — prompt workers to delve into their savings accounts to cover expenses, according to survey results released in July by the Transamerica Center for Retirement Studies.

Workers, also, are increasingly working past the traditional retirement age — and while financial need is increasingly part of why, workers also indicate they want to work to keep their minds active and maintain a sense of purpose in their lives, according to a report from Easterseals and Voya Cares.

Employers may, in turn, may want to consider tapping into older generational pools to find workers, especially those desperate to fill open roles, experts previously said.

Forty-three percent of workers with employer-sponsored insurance have been touched by medical debt, highlighting a need for employers to focus on physical and financial wellness, according to healthcare advocacy collective Goodroot.

Among those who have carried debt, 52% reported shouldering more than $2,500, according to the organization’s survey of 2,000 U.S. adults. Forty-five percent of respondents with debt said it hampered their ability to cover daily living expenses, and 92% said they neglected to receive healthcare to avoid further costs.

Perhaps counterintuitively, younger workers were more likely to have medical debt. “One would assume that older workers, who may have more health issues, would have greater prevalence and amount of medical debt,” Goodroot CEO Mike Waterbury said in a statement. “But our data shows that younger workers bear a greater burden on average.”

More than a quarter of workers are experiencing at least one form of healthcare-related financial hardship, a study published in the journal Health Affairs revealed last year. Researchers found that strain was especially pronounced for low-income workers.

A January 2024 report on employer-sponsored health insurance premium increases and their relationship to inequality suggested that families relying on employer-sponsored health insurance have lost about $125,000 over the last three decades.

“Costs of employer-sponsored health care benefits have increased faster than workers’ wages for several decades,” researchers noted in the JAMA Network report. (By Mercer’s count, healthcare costs rose by 5.2% throughout the past year.)

Researchers also said health insurance premium costs have contributed to disparities in income and overall wage stagnation. They also acknowledged that the toll of rising premiums is higher for Black and Hispanic families than it is for White families.

Waterbury called the act of ensuring the physical and financial health of employees, an “essential responsibility of employers.” He also highlighted the business case for helping workers reduce their debt.

“When employees are struggling with a massive, unpayable medical bill, it not only puts tremendous stress on their family, but also harms their ability to be productive and contribute to company culture,” he said. 

Two-thirds of workers say the cost of living is rising faster than their income, according to Bank of America’s 13th annual workplace benefits report, The Transforming Workplace. That compares to 58% of workers in February 2022.

Financial wellness among employees fell to 42%, the lowest it's been in the 13 years Bank of America has produced the workplace benefits report. That strain is more strongly felt among women, only 38% of whom characterized themselves as financially well in 2023, a five-year low and down from 55% the year before. Among women, 54% said they worried they wouldn’t be able to meet their financial responsibilities because of inflation, as opposed to 32% of men.  

Despite the effects of inflation and economic uncertainty, 56% of workers say they’re “cautiously optimistic” about their financial future over the next two to three years, per the report, which surveyed 1,300 employees and nearly 800 employers.

To remain competitive and retain workers, employers are turning to financial benefits. "American workers continue to feel stressed about their finances and are concerned about keeping up with the cost of living," Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in a statement about the new workplace benefits report. "Companies who show a sense of urgency for their workforce by offering financial wellness programs and resources which support employees' immediate needs and overall well-being will continue to stand out as employers' of choice."

In HR Dive’s 2023 Identity of HR survey results, published earlier this year, 43% of respondents said they offer retirement contributions or benefits as part of their talent acquisition strategy, compared to 35% the year before. In fact, retirement benefits had the greatest increase among offerings in total rewards packages.

And 90% of respondents in a 2022 survey by Morgan Stanley at Work said they would feel more invested at work if their employer offered financial benefits tailored to their needs.