Financial Wellness Good for Retirement Readiness and More

By ASPPA Net Staff • July 29, 2015 • 0 Comments
Financial wellness can affect more than just employees’ accounts and retirement readiness. It also can affect employees’ physical wellness and even an employer’s bottom line.

In “Financial Wellness in the Workplace 2015,” Alliant Credit Union cites statistics from the American Psychological Association that state that more than twice as many Americans are seriously concerned or worried about their finances than are obese. It also cites a Society of Human Resource Management study that found that 38% of employees now face greater personal finance challenges than they did just before the Great Recession.

In The Principal Financial Well-Being Index, The Principal found similar results:

  • 36% of employees are happy with their current financial situation;
  • 39% feel stressed about their current financial situation; and
  • Baby Boomers (at 31%) are less stressed about their current financial situation than Gen Y-ers (47%) and Gen X-ers (41%).
What to Do?

Paying down debt is the top money management priority for 34% of the employees in The Principal’s study. It also found that about 19% say spending too much is the biggest financial mistake they have made, while 17% cited taking on too much credit card debt. Not saving enough for retirement tied for fourth, cited by 9%. Not using a financial professional was cited by just 2%.

The Principal suggested that one answer may be making financial professionals available. It found that employees who use a financial professional (52%) are nearly twice as likely to say they’re happy with their current financial situation as those who don’t (31%). It also found that employees who use a financial professional are more likely to feel in control of their personal financial situation (71%) than employees who don’t (54%).

For those who use a financial professional, the priorities shift: 40% are more likely to say that saving for retirement is their top money management priority; among those who don’t use a financial professional, the percentage is 19%. Overall, 24% say that saving for retirement is their top money management priority.

Two-thirds (66%) of employees who use a financial professional believe they are making good progress toward achieving their long-term financial goals, compared with 47% of employees who don’t use a financial professional.

The Bottom Line

Alliant’s study argues that financial stress affects people at all income levels. And that financial worry takes its toll: its paper cites American Medical Association data that show that stressed people are three times more likely to have ulcers or digestive tract problems, 44% more likely to suffer migraines, 200% more at risk of a heart attack and 500% more likely to experience increased anxiety and depression.

Addressing that by increasing financial wellness can accomplish more than boosting employees’ financial and physical health, Alliant argues — it can help an employer’s bottom line. In a January 2015 study, it found that among employers that instituted financial wellness programs, they realized following positive results:

  • 43% increased employee engagement/morale;
  • 40% improved productivity;
  • 40% provided education for employees’ goals;
  • 36% helped alleviate employees’ financial stress; and
  • 23% helped reduce employee absenteeism.