Three reasons employers should help workers manage their financial stress
From supply chain issues and shrinking talent pools to a slowing economy, there’s a multitude of challenges you face as an employer to keep your business going. And there’s another one you may not have considered—your workers’ financial well-being. In our ninth annual stress, finances, and well-being report, we learned that personal financial worries continue to affect job performance, retirement decisions, and loyalty to employers—all of which can affect your company’s balance sheet and future success.
1 Increase productivity
As much as your employees may try to keep their personal and professional lives separate, a majority of workers (80%) are finding it hard to leave their financial concerns at the door. In fact, they’re spending an average of 3.3 hours every month on their personal finances while at work. This equates to one week of lost productivity per employee per year. And this loss is even greater for employers with a younger workforce. Our results show that Gen Zers and millennials are spending almost an hour more (4.2) on their finances instead of their work.
This highlights that financial stress isn’t just a personal issue—it’s a business issue that can significantly affect a company’s bottom line. We estimate the cost at $1,962 per employee per year in lost productivity and absenteeism.1 To find out the potential cost to your organization, you can use our financial stress calculator.
Opportunity for employers
Offering financial wellness resources is a simple way for businesses to help ease worker stress and boost productivity. But don’t take our word for it. Here’s what people told us in our survey:
- More than 40% would be more productive if they weren’t worried about their finances at work
- 82% believe access to financial wellness resources helps reduce financial stress
- 70% believe these resources help increase productivity—up from 57% in 2021
It’s easy to get started. Most retirement plan providers offer financial wellness education and tools that employers can use to help workers take control of their money.
2 Reduce delayed retirement
We also discovered a less obvious cost to employers—delayed retirement. Overall, 38% think they’ll now retire later than planned, and for some groups, this figure is even higher. As a result, businesses may experience higher compensation and benefits costs for those workers. Talent acquisition costs may also go up if younger workers leave due to fewer advancement opportunities.
Opportunity for employers
When people feel more financially prepared, they’re more likely to retire when planned. To help enable this, employers should make it as easy as possible for workers to save and plan for their future. Here are a few ideas to consider:
- Offer automatic enrollment and contribution increases
- Provide retirement planning tools that help them set goals and track their progress
- Offer access to objective advice from a financial professional
- Send personalized communications to encourage positive saving behaviors
- Educate workers on important retirement topics, such as Social Security, Medicare, and sources of retirement income
If you’d like to enhance your workers’ engagement with your retirement plan, consider connecting with your plan’s financial professional and service provider. They can help you understand your options and set up any new features or services.
3 Attract and retain talent
While the labor market is expected to slow in the coming months, many companies will still have positions to fill, and offering an attractive salary may not be enough to fill them. We found that many workers are placing a higher value on retirement plans and financial wellness resources when evaluating job opportunities.
Workers value their retirement plan …
… and access to financial wellness resources
Opportunity for employers
To help see where your business stands, consider benchmarking your retirement plan and financial wellness program with those of similar companies. This can help you understand what’s working and identify areas for improvement. And you may not have to do it alone—many financial professionals offer benchmarking services.
Prioritizing workers’ financial well-being—a worthy investment
A company’s greatest asset is its people, and businesses tend to perform best when their workers are at their best. Optimizing job performance involves more than just supplying the right tools and training; it involves helping workers strengthen their well-being, which includes their financial health. Employers who recognize this and take steps to help people manage their current financial needs while also saving for retirement can position their businesses for continued success.
Get more insight in our 2023 stress, finances, and well-being report to help you address workers’ financial stress and reduce the impact on employers.
1 This is a hypothetical illustration used for informational purposes only, based on data from John Hancock’s 2023 stress, finances, and well-being survey. This calculator is intended to provide general information about how much financial stress can cost a company every year. The above calculation is based on missing 2.8 hours/year and 39.6 hours/year of lost productivity due to symptoms of financial stress with an assumed salary of $46.27 per hour. Individual circumstances may vary and may not be reflective of your situation.
John Hancock’s ninth annual stress, finances, and well-being survey, John Hancock, Edelman Public Relations Worldwide Canada Inc. (Edelman) , December 2022. This information is general in nature and is not intended to constitute legal or investment advice. Edelman and John Hancock are not affiliated, and neither is responsible for the liabilities of the other. This report presents the results of research conducted by Edelman on behalf of John Hancock. The objectives of this study were to (1) quantify the financial situation and level of financial stress of John Hancock plan participants; (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. This was an online survey of 3,825 John Hancock plan participants. The survey was conducted from 11/29/22 through 12/14/22, with an average survey length of approximately 18 minutes per respondent. Respondents were located from a list of eligible plan participants provided by John Hancock. All statistical testing is done at 0.95 significance levels. The maximum margin of sampling error at the 95% confidence level is ±1.3%. 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.