Skip to main content

You are here

Advertisement

How Employees’ Debt Problems May Affect Retirement Savings

Practice Management

Employees increasingly are concerned about their household’s financial well-being and most describe their level of debt as a problem, which could affect their ability to save for retirement, a new survey finds. 

Six in 10 employees (60%) are at least moderately concerned about their household’s financial well-being, which has increased by 11 points since 2021 (49%). Saving enough for retirement (45%), having savings in case of an emergency (41%), and paying monthly bills (38%) are the top causes of employees’ financial stress. 

Moreover, 8 in 10 employees (80%) acknowledge they have a problematic level of debt—which has increased by 15 points since 2021 (65%). Among those with a debt problem, 78% describe their household’s level of credit card debt as a problem. In addition, more than half describe their medical or health-related (57%) and student loan (51%) debt as problems. 

These are among the major findings from the 2022 Workplace Wellness Survey published by the Employee Benefit Research Institute (EBRI) and Greenwald Research. The survey examines worker attitudes towards employment-based benefits in the workplace, as well as a broad spectrum of financial well-being, employment-based health insurance and retirement benefit issues.

Consequently, only half of employees (52%) agree that they have enough savings to handle an emergency or sudden large expense. Two-thirds (67%) feel prepared to manage an unexpected expense of $500, but only 45% feel prepared to handle an unexpected expense of $5,000. 

To pay for an unexpected expense of $5,000, nearly half (44%) of employees would take the funds from their savings. A third would ask their friends/family (32%) or charge the expense to their credit card (32%). EBRI also found that 6 in 10 employees (60%) agree that their retirement plan savings are the only significant emergency savings that they have.

Financial Wellness Programs

Against that backdrop, employees also agree that their employers have a responsibility to ensure they are physically, emotionally and financially well, but fewer than half rate their employer’s efforts highly in these areas.

Three in four employees agree that their employers have a responsibility to make sure employees are mentally well (77%) and healthy and physically well (74%), while two thirds (66%) feel the same about their employer’s responsibility to ensure employees are financially secure and well.

That said, fewer than half of employees say they are offered a financial wellness program at work. When offered, 6 in 10 employees have participated. In addition, more than 4 in 10 employees (45%) say their employer offers the opportunity to participate in a financial wellness program.

Additionally, less than a quarter (23%) report being offered an emergency savings fund. Among those offered this type of option, 6 in 10 (59%) say they have used or taken advantage of it. Among those not offered this fund, 83% are interested in having the benefit available.

Benefits Satisfaction

Meanwhile, retirement savings and health insurance plans are the most common employee benefits and are the top benefits for employee retention/recruitment and their financial security. Overall, 4 in 10 employees (44%) are “extremely or very satisfied” with their benefits package, which has decreased by 7 points since 2021 (51%). 

Yet, when looking at retirement benefits, the survey found that half of employees are satisfied with their current retirement benefits and most are satisfied with the contributions received from their employer. Here, the survey found that 7 in 10 employees (70%) say they are currently offered a retirement savings plan; 51% are “extremely or very satisfied” with their current retirement benefits and nearly 6 in 10 (58%) understand their retirement benefits “extremely or very well.”

Aside from income and compensation, workplace flexibility, work-life balance, paid time off and leave benefits are also important to employees, EBRI found. Most feel tele-working has positively impacted their well-being. Four in 10 employees (39%) describe the work-life balance at their company as excellent or very good, which has decreased significantly since 2021. Another 36% rate it as good and 25% rate it as fair or poor.

“This is the third year of the Workplace Wellness Survey and probably the most meaningful survey report where workplace flexibility, work-life balance, paid time off and leave benefits have become major critical factors for employees,” notes Paul Fronstin, Director of Health Benefits Research at EBRI.

“In recent years, key metrics like job satisfaction, benefits satisfaction and ratings of work/life balance have remained fairly consistent. It’s important to note the declines measured this year in overall benefits satisfaction and in ratings of work-life balance, which contrast with stable job satisfaction, and the belief that remote work has improved well-being and underscore the need for employers to ramp up well-being efforts,” adds Lisa Greenwald, President & CEO of Greenwald Research.

For this year’s survey, a total of 1,518 full-time and part-time U.S. workers ages 21-64 were interviewed from July 13-29, 2022.