Financial stress can have an impact on mental health
As we focus on mental health month this May, it should come as no surprise that workers’ mental health has suffered during the pandemic. Many of the factors affecting mental health over the past two years have been universal and beyond our control. Personal finances, however, are a continued cause of stress among workers, and something that employers may be able to help them control. Employers that focus on their employees’ mental health in May—or any month—should consider including financial well-being in their overall wellness activities.
The pandemic has had an impact on workers’ mental health
In our recent study of stress, finances, and well-being, 49% of workers said that the pandemic was having a negative impact on their mental health. More than half have been stressed during the pandemic, including 29% who said they’d experienced major stress.
With isolation, uncertainty, fear of illness, and loss of loved ones, this hasn’t been just the normal stress of everyday life. Sustained stress can eventually have a negative impact on mental health, and after more than two years, many workers are suffering:
- 42% say they’ve experienced depression in the past year
- 37% say they’ve felt lonely at times in the past year
Workers with poor mental health reported that stress has more of an impact on their health and their daily lives than did workers with good mental health.
How can financial stress affect mental health?
More than half of workers have reported financial stress during the pandemic, including 23% who say they’ve had major financial stress. Economic uncertainty has increased the stress, with economic conditions being the #1 worry.
Financial stress makes resilience harder: Whereas 35% of people with good mental health are concerned about the economy, 60% of people with poor mental health have that concern. Although the dynamics of the economy are outside our control, workers are well aware that it can have an impact on their personal finances. And if they’re already stressed, this concern can be heightened.
And the concern may be further compounded by the feeling that it’s here to stay: Only 34% are optimistic that things will get better in the coming year. And it makes sense if we think about Maslow’s hierarchy of needs—shelter, safety, and sustenance. In our modern world, these basic needs form a foundation that helps enable health and personal growth, and they’re generally enabled by stable finances.
Even before the pandemic, employers had been recognizing the importance of financial health and its connection to mental health. Financial wellness programs have been on the rise, and workers appreciate the help—89% say employers should offer them one. And no surprise, it’s the basics that people want help with:
- Recommendations on Social Security strategies
- Forecasting retirement income
- Access to expertise on will and estate planning
- Identifying gaps in financial wellness
- Opening an emergency savings account and using education savings tools (tied)
Back to the financial basics for mental health month
The month of May brings signs of spring and symbolizes new beginnings, a hopeful time to observe mental health month. As employers put together wellness programs in earnest attempts to help their employees cope with the curveballs of life, it’s important to remember the role that finances can play in a person’s overall well-being. You can help your employees attend to their mental health basics by helping them stabilize their financial basics.
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: (1) quantify the financial situation and level of financial stress of John Hancock plan participants and plan participants outside of John Hancock; (2) determine the key triggers of financial stress; (3) understand the extent to which actions, including actual financial behavior and planning activity, ameliorate stress; and (4) assess retirement preparation and readiness. It was an online survey 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.
INTENDED FOR PLAN SPONSOR USE.