The gap in financial health between generations is growing as Generation Y employees — those currently between the ages of 21 to 32 — are struggling more with debt and cash management issues, while Baby Boomer and Generation X employees’ financial wellbeing has improved in the past twelve months, according to the 2014 Employee Financial Wellness Survey by PricewaterhouseCoopers US.
Gen Y, or millennials, was the only generation to see an uptick in the percentage of employees who consistently carry balances on their credit cards, up 14 percentage points year-over-year to 51 percent. More Gen Y employees also reported difficulty meeting their household expenses on time each month — up 11 percentage points to 41 percent from last year; again, the only generation not to see an improvement.
“While last year our results showed that Gen X carried the heaviest financial burden as they were pulled between obligations to their parents, children and their own retirement, their financial health, along with that of baby boomers, appears to be recovering faster than Gen Y employees,” says Kent Allison, Partner and National Practice Leader of PwC’s Employee Financial Education practice. “Baby boomers and Gen X have savings stored away and many still have some equity in their homes, so they’ve benefitted from the stock market rally and an increase in home values in most markets in the US.
Millennials are more dependent on their incomes, and we’ve seen that the labor and wage markets haven’t improved as quickly as the equity markets. Disparity in financial health between the generations will likely continue to grow until we see an increase in wages that is greater than the increase in living expenses.”
Health care continues to be a significant concern with most employees (81 percent) saying they believe that health-care costs will rise over the next several years, and less than half of all Baby Boomers (48 percent) confident they’ll be able to cover their medical expenses in retirement. Thirty-three percent of employees cited health-care costs as one of their biggest concerns about retirement, but fewer employees cited the fear of losing health-care coverage as a reason to delay retirement, down 5 percentage points this year from 29 percent last year.
There is a common perception among employees that the Patient Protection and Affordable Care Act will increase health insurance costs, as reported by more than half of employees (59 percent). While the vast majority of employees (85 percent) say they are familiar with PPACA, 19 percent have looked into using a health care program from a marketplace or exchange.
Most employees (61 percent) say their employer has not provided any tools or resources to help them understand the effects of PPACA on their financial health and 30 percent say their employer has provided educational pamphlets and materials.