Employees are more aware of their financial shortcomings, but with that increased awareness comes greater strain on their psyches. That was the major takeaway of a recent survey by Financial Finesse, a provider of fiscal education.
The third-quarter “Trends in Employee Financial Issues” survey revealed that 19 percent of employees report “high or overwhelming” levels of financial stress, up from 13 percent in the same quarter of last year. Similarly, 41 percent expressed uncertainty regarding their ability to achieve future financial goals, a significant jump from 34 percent in the third quarter of last year and 33 percent in Q3 2011.
What has them so worried? The U.S. economy and stock market were cited by 43 percent of employees as the major stumbling blocks to a secure financial future. That’s an increase from 42 percent Q3 2012 and 40 percent in 2011’s third quarter.
Employees in the upper age range – 45 and older – were the most anxious. According to the survey, 84 percent of those 45 or older admitted to some level of financial stress, up from 80 percent a year ago and 74 percent in the third quarter of 2011. Financial Finesse researchers attributed that escalation to the immediate and conflicting pressure those in that age group may be facing, such as paying for college for their children and caring for aging parents while at the same time trying to save for retirement and confronting higher health-care costs.
Awareness and action
The overall employee financial wellness score dipped below five (4.9) for the first time since the first quarter of 2012. Yet that decline, emphasized the Financial Finesse researchers, is not due to worsening cash and debt management – areas where employees are maintaining good habits. (For example, 88 percent said they pay their bills on time each month, the same percentage as the previous quarter.) Instead, the researchers conclude it is due to employees heightened awareness of their financial challenges.
Consequently, they are taking steps to address their concerns, at least at the older age bands. Forty-eight percent of employees who took a financial wellness assessment were 45 or older in the latest survey, an upward arc from 44 percent in the same quarter of last year and 43 percent in Q3 2011.
It’s also translating into improved retirement planning. When queried if they were on target to replace at least 80 percent of their income, or goal, in retirement, 19 percent answered yes compared to 18 percent a year ago and 12 percent in the third quarter of 2011. The older one gets the more they have made that calculation, with the highest percentages seen at 55-64 (23 percent) and 65 and older (33 percent).
Rising participation in work-based retirement plans was also charted, with the percentage climbing from 87 percent in Q3 2012 to 90 percent in the latest survey. More employees said they have used a retirement calculator: 39 percent in Q3 compared to 34 percent in the prior year.