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Although the economy continues to be in a healthy state, many workers across the United States are still living paycheck to paycheck.
Employers are aware of these struggles and are worried how it will affect their ability to save for retirement, according to research from Massachusetts Mutual Life Insurance Company.
The 2019 “MassMutual Workplace Financial Wellness Study” found that 79% of employers said their workers are struggling financially. The larger the employer, the more likely respondents are to express concern about employee financial wellness issues.
“Our research finds that financial wellness issues are coming to roost at the workplace and that employers are acutely aware of their employees’ financial struggles,” said Ken Verzella, head of financial wellness for MassMutual. “As long as workers struggle to overcome shorter-term financial issues such as eliminating debt and building emergency funds, they will be unable to save in any meaningful way for retirement and other long-term financial needs.”
Employer estimates vary about how many employees are plagued with financial problems. However, half of employers (51%) estimate that at least 25% or more of their workers struggle financially and 15% of employers said at least half of their workers are plagued by financial woes. Proof points for employees’ financial struggles include managers’ conversations with employees, employees’ lack of participation in retirement plans, working second jobs, taking loans from retirement plans and asking for paycheck advances, among other indicators.
The most prevalent employee financial problems 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 the study. In addition, employers expressed greater concern about some financial struggles than others.
A Call for Help
A majority of employers (57%) report that workers are seeking help with their personal financial problems from their employers, according to the study. Another 17% of employers said 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 found.
The need for financial assistance through the workplace is an opportunity for financial advisors who support workplace retirement savings plans such as 401(k)s to connect with and help more people, according to Verzella. Advisors can often tap into resources offered by retirement plan providers, he said.