Helping workers manage four areas of financial stress
After dropping during the pandemic, financial stress is on the rise—68% of participants say they’re experiencing it compared with 58% in 2021. And while personal in nature, this stress can be a real cost for employers as it can result in lower productivity and higher absenteeism. In our ninth annual stress, finances, and well-being report, we learned four areas of concerns, which plan sponsors—along with their financial professional and retirement plan provider—can help ease through plan design, education, and financial wellness resources.
1 Not having enough saved for retirement
It’s hard enough for people to save for retirement under good economic conditions let alone when they’re feeling the pinch of higher prices and rising interest rates. This is likely why 56% of workers say they’ve fallen behind on their savings goal. Fortunately, they’ve identified the types of support they think would help them most to better prepare financially for retirement.
Plan sponsors should review the retirement planning resources they make available to help ensure workers have the support they need—and that may include reaching out to their financial professional and retirement plan provider for help.
2 Credit card debt
When budgets are tight, people often turn to credit cards to pay for their purchases. And although it can be done responsibly, keeping up with the payments can be a challenge; in fact, 73% of workers who consider their debt a major problem have outstanding credit card balances.
That said, debt management education shouldn’t be limited to just credit cards as workers are likely dealing with other types of debt as well. The topics you cover could include:
- Good versus bad debt
- Repayment strategies
- How to balance financial goals, such as saving for retirement, with paying down debt
- The importance of credit reports and credit scores
Many retirement plan providers have debt management presentations and other tools that plan sponsors and financial professionals can use to help provide this support.
3 Emergency savings
In 2022, the U.S. Federal Reserve reported that 32% of people said they’d have difficulty paying for an unexpected $400 expense. Our 2023 findings echo this sentiment—32% of workers are worried that they don’t have enough money to cover sudden and unexpected costs.
There are a few ways employers can help workers build a financial buffer, including adding emergency savings accounts to their benefits offering or pairing emergency savings with their 401(k) plan, known as a sidecar account. Additionally, the SECURE 2.0 Act contains two optional emergency savings and withdrawal provisions that plan sponsors can adopt starting in 2024. Sponsors interested in providing this support should consult with their plan’s financial professional.
4 Overall financial situation
Many workers have multiple retirement and savings accounts, as well as creditors, which can make it harder for them to get a clear picture of their financial life. Consider offering an online resource that helps them organize and manage their finances in one central location. With a more accurate view of their finances, workers may find it easier to prioritize their debt, savings goals, and other financial obligations.
Helping workers benefits employers, too
Current economic conditions are making it difficult for many workers to save money, plan for retirement, and pay down debt—all of which has increased their financial stress. Providing access to retirement planning and financial wellness resources can help ease this anxiety, leading to higher productivity.
Lending a helping hand doesn’t require doing it alone—plan sponsors can partner with their financial professional and retirement plan provider for help or to supplement their financial wellness program.
Get more insight in our 2023 stress, finances, and well-being report to help you drive behaviors that matter.
In November 2022, John Hancock commissioned our ninth annual stress, finances, and well-being survey with the respected research firm Edelman Public Relations Worldwide Canada (Edelman) . An online survey of 3,825 workers was conducted between 11/29/22 and 12/14/22 to learn more about individual stress levels, their causes and effects, and strategies for relief. John Hancock and Edelman are not affiliated, and neither is responsible for the liabilities of the other.
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.
This is intended for a plan sponsor audience.