Identifying the causes and cost of financial stress
For eight years, we’ve conducted our study of stress, finances, and well-being1 to help us understand the causes of financial stress and how they keep people from saving for retirement. In the process, we’ve also calculated how much employee financial stress costs employers through absenteeism and lost productivity. As with so many other things, the cost of employee financial stress has gone up during the pandemic.
Stress of any kind can affect both physical and mental health. The pandemic has brought a wide array of stressors to American workers, and they’re feeling the weight of it all. Almost three-quarters of participants have been moderately to extremely stressed in the last six months, and many have experienced side effects:
- 49% say the pandemic has had a negative impact on their mental health
- 42% have experienced depression in the last year
- 37% have been lonely at times in the last year
- 34% say the pandemic has had a negative impact on their physical health
Even with the best intentions to keep it at bay, stress and health can affect people on the job:
- 40% of workers say they’d be more productive at work if they weren’t worried about their finances
- 26% spend three or more hours per month on their personal finances at work (up from 19% before the pandemic)
So it’s really no surprise to see that the cost of financial stress to the employer has gone up to more than $2,400 per employee per year—an increase of 26% during the pandemic.
The cost of financial stress per employee has increased 26% during the pandemic
Workers appreciate financial wellness programs
While the cost of stress is a daunting number, employees overwhelmingly support the availability of financial wellness programs at work. Eighty-nine percent say it’s important for employers to offer financial wellness programs, with a substantial increase in those saying the programs help reduce financial stress and increase productivity for and loyalty to the employer.
Financial wellness programs can reduce stress, increase loyalty, and improve productivity
An opportunity to enrich your benefits program
We’re seeing many of our clients reviewing and enriching their retirement programs to help them attract and retain talent in the face of recent labor challenges. We couldn’t agree more, as we’ve always believed that workplace programs are the best opportunity for people to save for a prosperous future. And this year’s study of stress, finances, and well-being reinforces that, with 93% of participants rating retirement plans as a critical company benefit and almost as many saying they’d like access to a financial wellness program.
The type of help people want from their employers covers the financial basics:
- Recommendations on Social Security strategies
- Help forecasting retirement income
- Access to expertise on estate planning
- Ability to assess financial wellness and gaps
- Opening an emergency savings account
- Education savings tools
Embrace the power of partnership to help boost financial wellness
Employees are stressed, it’s affecting your business, and they want your help to improve their financial well-being. It may sound dire, but whether you offer a program or are considering implementing one, you don’t have to go it alone. Work with your plan’s financial professional, consultant, and recordkeeper to see how they can complement or supplement your own resources. Helping to reduce your employees’ stress and increase their loyalty may be the remedy you need to help your business beat some of the labor-related side effects of the past two years, offering hope for the long-term wellness of both you and your employees.
1 In August 2021, John Hancock commissioned our eighth annual financial stress survey with the respected research firm Greenwald & Associates. An online survey of 1,162 workers was conducted between 8/4/21 and 9/3/21 to learn more about individual stress levels, their causes and effects, and strategies for relief. This information is general in nature and is not intended to constitute legal or investment advice. This report presents the results of research conducted by Greenwald & Associates on behalf of John Hancock. Greenwald & Associates and John Hancock are not affiliated, and neither is responsible for the liabilities of the other.
The objectives of this study were to: i) quantify the financial situation and level of financial stress of John Hancock plan participants and plan participants outside of John Hancock; ii) determine the key triggers of financial stress; iii) understand the extent to which actions, including actual financial behavior and planning activity, ameliorate stress; and iv) assess retirement preparation and readiness. It was an online survey of 1,162 John Hancock plan participants that was conducted from 8/4/21 through 9/3/21, with an average survey length of approximately 19 minutes per respondent. All statistical testing is done at 0.95 and 0.99 significance levels. The maximum margin of sampling error at the 95% confidence level is ± 4.1%. Percentages in the tables and charts may not total to 100 due to rounding and/or missing categories.
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made herein.