Financially Stressed Workers’ Worrying Ways

Worries about retirement are adding to the stress of already financially stressed workers — who don’t seem to be doing anything about it.

A new report by Financial Finesse notes that last year, nearly a third (30%) of employees with overwhelming levels of financial stress left money on the table by not contributing enough to their employer-sponsored plan to receive the full company match. Even more disturbing is that 4 out of 10 reported not contributing at all to their employer’s retirement plan.

Only a quarter of employees with high or overwhelming levels of financial stress have run a retirement projection. Of those that have, only one in three employees with high levels of financial stress, and one in six employees with overwhelming levels of financial stress, feel that they are on track to achieve their income-replacement goals in retirement. Little wonder that uncertainty over reaching future financial goals is cited as a main cause of financial stress by about 6 in 10 employees.

The percentage of employees with at least some level of financial stress that reported taking a risk assessment decreased slightly in 2015, and there was also a significant drop in the percentage of employees that reported rebalancing their investment accounts, down 4 to 6 percentage points for employees with at least some level of financial stress.

Stress Level?

Most employees continued to feel some level of financial stress in 2015, with only 15% of those who took a financial wellness assessment reporting having no financial stress, up slightly from 2014. There is a level of heightened concern from 25% of those who reported feeling their financial stress is high or overwhelming. However, this is down from serious concern in 2009 and 2010, when over 97% of employees were reporting some degree of financial stress, and approximately one-third reported high or overwhelming stress.

For all of 2015:

• 60% reported that they have some financial stress;

• 19% felt that their financial stress level is high; and

• 7% are at a point where their financial stress is overwhelming.

Only 6% of employees with overwhelming financial stress have an emergency fund, and only 44% pay their bills on time each month, down from 48% in 2014. According to the report authors, this negative financial behavior results in more than one-third reporting they have resorted to taking a retirement plan loan or hardship withdrawal.

By contrast, the Financial Finesse report claims that good money management behaviors tend to minimize financial stress. Only 11% of employees with no financial stress have ever taken a retirement plan loan or hardship withdrawal, while:

• 94% live within their means;

• 98% are paying their bills on time each month;

• 80% maintain an emergency fund; and

• 93% are comfortable with their debt levels.

Gender Gaps

Women are more likely than men to report feeling overwhelming financial stress. Even in combination with age, income, and the presence of minor children, gender played a major role in the level of stress reported by users. Mothers with minor children living in households with income below $60,000 (9% of the total sample) are the most financially stressed. The report also found that:

• 9% of Millennial women under age 30 reported overwhelming financial stress compared to 5% of their male counterparts.

• Lower-income males (making under $60,000 a year) were more likely than lower-income females to report no financial stress (13% versus 9%).

• Pre-retirees (age 55+) also have financial stress levels that are lower than the average, with 23% indicating they have no financial stress, though 28% of pre-retirees who are heading into retirement with uncomfortable levels of debt, no emergency savings (33%), and uncertainty about their retirement preparedness (50%).

While increased family income is correlated with a reduction in financial stress, it is noteworthy that employees from higher-income households still experience financial stress, although they are not as likely to have high or overwhelming financial stress, according to the report. Seventy-seven percent of men and 83% of women in households making $100,000 or more have financial stress, with 13% and 17%, respectively, having high or overwhelming levels of financial stress.

Oh, and the report speaks to the impact that all this stress has on productivity at work, sleeplessness (which also impacts productivity at work), and even marriage — which also affects sleeplessness, financial security, and productivity at work.