Companies Benefit When Employees Are Financially Healthy

June 11, 2024

Employee financial stress is on the rise with uncertain economic times, inflation, soaring rates and record credit card debt. Yet most U.S. workers are not comfortable admitting they need help with their finances.

Day after day, financial stresses can take a toll on physical and mental health. According to the American Psychological Association, chronic financial stress can lead to depression, insomnia, anxiety, heart disease and diabetes. PwC research indicates 57% of survey respondents say finances are the top cause of stress in their lives.1

The survey highlights how much of a negative impact financial stress and money worries have had on key drivers of health and
well-being:

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To help employees manage stress and health concerns, many organizations sponsor wellness programs that encourage healthy eating, preventive care screenings, exercise, counseling, meditation and mindfulness. However, programs may not address the causes of stress. Health issues can have a direct impact on your organization’s bottom line through healthcare costs, absenteeism, productivity and delayed retirement.

How Much Is Workforce Financial Stress Costing Your Organization?

According to research featured in Forbes, 80% of employers report that financial stress lowers their employees’ performance levels — costing employers nearly half a trillion dollars annually. In addition, their lack of focus can impact their quality of work. From employee retention to healthcare, financial stress and vulnerability represent real dollars in addition to erosion of workforce well-being and culture.

The state of personal finance is one of fear anxiety. Consider some recent statistics that show how Americans are struggling with their personal finances:

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Employees experiencing financial stress need a financial well-being program that does more than offer online retirement income calculators or sessions with investment specialists. Employees need a financial well-being program that helps them improve their ability to live within a budget, reduce debt and save for the future.

Help Employees Take Control of Their Finances & Save More for Their Future

Poor financial wellness is a national epidemic. Employers can help their employees navigate challenging financial times by investing in their financial well-being with company-sponsored programs that effectively promote financial education and help to prepare them for a financially secure future.
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A key component of achieving financial wellness in the workplace is making sure your employees are financially prepared to retire on time. Employers have begun to focus on understanding the barriers employees face in saving for retirement. If employees can’t tackle their short-term goals (i.e., pay down debt, establish emergency savings, afford healthcare), they won’t be able to start to think about retirement.

Helping employees improve their retirement readiness can also help mitigate the projected economic costs to your business. Each year an employee delays retirement costs an employer more than $50,000 per employee, as reported in our article, “Is Delayed Retirement Impacting Your Bottom Line?” In other words, employers implement financial wellness programs not only to help their employees now, but also to help workers achieve the financial freedom to retire. The potential savings to an employer can be millions of dollars.

Financial Well-Being Is a Win-Win for Everyone

Given the workplace impacts of financial stress, it’s in every employer’s best interest to support employees in managing it. Improving employees’ financial well-being could have a ripple effect in driving increased worker productivity (86%), desire to stay with their employer (86%), job satisfaction and engagement at work (84%), ability to focus (84%), as well as improved mental (84%) and physical (80%) health.”7

Achieving financial wellness and retirement readiness depends on workplace benefit offerings. Effectively designing and rolling out a financial wellness program requires setting a strategy; establishing goals and objectives; utilizing data and tools; creating engaging communications; measuring results; and adjusting based on results.

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Employee Financial Well-Being: It Matters to Your Business

Join us on Wednesday, June 26th to learn how your organization can significantly reduce benefit costs by helping employees take control of their finances and save more for their future.

Eligible for one professional development credit for SHRM-CP® or SHRM-SCP®.
 

1 PwC, Employee Financial Wellness Survey, 2023
2 Payroll.org, Increase in Americans Living Paycheck to Paycheck in Just One Year, 2023
3 Wells Fargo Money Study, 2023
4 Ramsey Solutions, The State Of Personal Finance In America, Q2 2023
5 Betterment at Work, The Retirement Readiness Annual Report, 2023
6 Bank of America, Workplace Benefits Report, 2022
7 SoFi at Work Study, 2022

This information is provided solely for educational purposes and is not to be construed as investment, legal or tax advice. Prior to acting on this information, we recommend that you seek independent advice specific to your situation from a qualified investment/legal/tax professional. | 1024.S0529.0040