Pinching Pennies: The Cost of Financial Stress in the Workplace

PINCHING PENNIES The cost of financial stress in the workplace. Studies show financial stress is far and away Increased levels of job stress have been a major source of stress for American adults. associated with increased rates of: This stress has escalated Heart attack Hypertension over the last few decades. The American Psychological Association (APA) Stress in the Workplace study found: 49% said low salary 36% of workers reported a significant impact on their experiencing work stress stress level at work. regularly. A subsequent Stress in America survey conducted by Harris Poll on behalf of the APA found: 24 72% of Americans reported 22% said they experienced 64% say money is a somewhat or very significant source of stress. feeling stressed about money extreme stress about money at least some of the time during the past month. during the past month. Parents, younger generations, and people living in lower-income households report higher levels of money-related stress than Americans overall. Especially when it comes to money-related stress 77% of parents 75% of millennials 76% of Gen Xers (18 to 35 years old) (35 to 49 years old) Some Americans put health care needs on hold because of financial concerns. Nearly 1 in 5 Americans say they have either considered skipping or skipped going to the doctor when they needed health care because of financial concerns. Stress about money also impacts relationships 22% of Americans say they are not doing enough to manage Almost 1/3 of adults with their stress. partners report that money is a major source of conflict in their relationships. A Google Consumer Survey conducted by MagnifyMoney found: • 24.8% have less than $100 Americans do not have • 23.8% have between $101 and $500 a lot of money saved in %24 • 7.7% have between $501 and $1,000 their bank accounts. • 16.4% have between $1,001 and $5,000 • 27.3% have more than $5,000 A 2014 survey by Financial Fitness Group asked employees: ? "How frequently do you find yourself 48.2% responded just getting by financially and living "All the time." paycheck to paycheck?" A national Harris Interactive and Purchasing Power survey found: 46% of respondents said 44% say they worried about that on average they spent their personal finances during 2 to 3 hours per week at work work hours. dealing with personal finances. 41% of employees indicated 44% do not have at least they still have at least a fair $2,000 $2,000 in emergency savings for unexpected expenses. amount of financial stress. The repercussions of financial stress in the workplace can be damaging to a company as a whole. Consequences of financial stress include: 60 to 80% of all work-related accidents happen due to the amount of stress an employee is under. V High turnover rates Medical issues VA higher absentee rate Loss of productivity A 2010 Federal Reserve study estimated that: Financial stress costs an $230B Businesses lose $230 billion employer an average of $5,000 $5,000 a year due to lost productivity. per employee per year. In a study released by the Schwartz Center for Economic Policy Analysis at the New School: 68% of working age people (24 to 64 years old) did not participate in an employer-sponsored retirement plan. Of working-age Americans with an employer-sponsored retirement plan available to them: 16% had a defined benefit plan 63% had a defined contribution (a.k.a. a pension) and 401K plan such as a 401K. %24 The median net worth among households near retirement (55 to 64 years old) show that only about 1/4 can expect an adequate income stream from retirement savings. The Federal Reserve Board reports that: 31% of the American including 19% of people 55 to 64 years old. 49% of all adults are not actively thinking about saving for their post-working years. workforce has no retirement savings or pension, PricewaterhouseCoopers' 2015 Employee Financial Wellness study found: 23% of employees have withdrawn money from 35% say it's likely they'll need retirement plans to pay for to do so. expenses other than retirement. How to improve employees' financial literacy & stability Pay attention to warning signs Signs that employees are under financial stress include: 401K 401K hardship withdrawals Requests for pay advances Wage garnishments Promote financial education programs Increased financial literacy in employees can lead to: Better job performance Stronger commitment to Increased productivity the company Better business stability during Decreased workplace Decreased healthcare costs times of economic volatility distractions 401K Higher participation in 401K benefit programs Reduced absenteeism A quality workplace financial Investing in financial education can result in reduced operating costs of $348 per employee sick program should provide employees access to help with their overall financial fitness at each stage $348 day on average. of their career. Recognize that financial education goes beyond retirement Consider offering a comprehensive program package that includes access to information and seminars on: 20 15 32 $67 Retirement v Budgeting v Money management 24 Voluntary benefits V - Employee purchase programs - Financial counseling services Financial planning V Tailor financial education based on employees' levels of distress Make sure the financial programs you offer apply to every employee •0• High financial distress/poor financial wellness •.. Credit union and bank Coaching on how to prepare Individual budgeting, credit education, and credit affiliations providing preferred for a financially successful services to employees retirement recovery counseling Setting financial goals Benefits information •0• To address average financial distress/average financial wellness •.. %$4 Money coaching on critical wealth management practices Mortgage lender education Benefits information for achievement of homeownership goals Tax preparation education Insurance education Investment education advice Credit union and bank Estate transfer workshops Post-retirement financial affiliations providing preferred services to employees education Retirement planning education explaining components of post-work income and how to continue preparing for a financially successful retirement •.• To address low financial distress/high financial wellness • o. Estate transfer workshops Money coaching providing direct Post-retirement financial and counseling education on critical wealth education management practices Investment advice Tax preparation education Retirement planning education explaining components of post-work income and how to continue preparing for a financially successful retirement Make sure financial literacy programs are accessible $$$ Research shows the largest impact on participation and contribution rates was found via internet-based tools. Employees should be able to access their account information, software, and educational material on their own time. Consider third-party financial experts Employees can benefit from hands-on assistance and training programs. Financial stability is not only important for the health and wellness of employees, but also the success of an entire company. Consider these tips to improve your employees' financial fitness. Sources: amanet.org forbes.com stress.org apa.org jumpstart.org web1.lifebenefits.com cambridge-credit.org magnifymoney.com venturebreak.com Brought to you by: com. A small oart of vour job is 100% of ours %24 24