Employers fret about employee finances

Una Morabito

By Una Morabito
Una Morabito is Head of Client Management for the Workplace Solutions unit of MassMutual.
Posted on Dec 4, 2019

It’s time for another workplace pop quiz: what’s your estimate of the percentage of your employees who are struggling financially?

A. 10 percent

B. 25 percent

C. 50 percent

D. Depends upon if it’s payday or not

The right answer is there’s no right answer. But if even some of your employees have money problems, you’re not alone.

The 2019 MassMutual Workplace Financial Wellness Study finds that eight in 10 employers say their workers struggle financially. 1 Employers say their workers are coping with persistent challenges such as saving for retirement, paying down debt and dealing with medical expenses, to name a few. The larger the employer, the more likely respondents are to express concern about employee financial wellness issues.

Employer estimates vary about how many employees are plagued with financial problems. Half of employers (51 percent) estimate that at least 25 percent or more of their workers struggle financially and 15 percent of employers say at least half of their workers are plagued by financial woes, the survey finds. How do employers know? The evidence is everywhere.

The more obvious signs of financial stress come directly from conversations between managers and workers about employees’ money problems. Less obvious but still visible are signs such as a lack of participation in retirement plans, employees working second jobs, taking loans from retirement plans or requesting paycheck advances. As an employer, you may have already noticed these signs or others.

There are many causes for financial un-wellness but the most prevalent cited by employers include credit card or other consumer debt, day-to-day expenses for housing and childcare, the inability to save and prepare for retirement, a lack of emergency savings, and high medical costs, according to MassMutual’s study.

Leading the parade of woes that most concern employers are their employees’ lack of financial readiness for retirement as well as participation in retirement plans, preparation for medical costs and an inability to handle emergency expenses, the study finds. Other concerns include childcare costs and debts of all kinds.

It’s a litany of woes that could make even the sunniest HR person collapse in resignation. So what to do about it? Where to start?

Apparently, wellness starts at the workplace. A majority of employers (57 percent) report that workers are seeking help with their personal financial problems from employers, according to the study. Another 17 percent of employers say they are unsure if employees want help through work. Again, the larger the employer, the more likely the company is to report that employees are seeking help, the study finds.

Fortunately, many retirement plan recordkeepers and benefits providers have anticipated and responded to this trend by developing robust financial wellness programs, tools, educational assistance, new financial solutions and other resources. Some are farther along than others so it pays to work closely with financial professionals and benefits consultants to determine which providers offer the right solution.

Many employers and their employees are looking for educational assistance with everything from paying down credit card debt and extinguishing student loans to preparing for healthcare in retirement and generating retirement income. But they also need help prioritizing their workplace benefits and making the best choices that fit their needs and budget.

Many employers are complementing their traditional retirement plan, healthcare and protection benefits with nontraditional products and services. Frequently, employers are assisting employees with tuition loan debt and refinancing, creating emergency savings, protecting against medical emergencies, budgeting, debt management and others.

Finding the right blend of education, tools and benefit offerings can — with time and persistence — help employees get back on track financially. Once that happens, they can save or save more for longer-term financial goals such as retirement.

The end game is to improve your quiz score by having a much lower percentage of employees who are financially un-well and a much higher percentage who are financially secure and on target for retirement.

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1 MassMutual Workplace Financial Wellness Study, 2019.