Employees are prioritizing short-term financial needs over retirement savings, according to findings from Bank of America’s 13th Annual Workplace Benefits Report. The survey found fewer employees are prioritizing long-term retirement savings (31%, down from 45% in 2022) as a growing number are focusing on short-term financial needs. Those needs include paying off credit card debt (16% vs. 11% in 2022) and saving for the unexpected (13% vs. 8% in 2022).
Reviewing how your plan aligns with workplace trends can help you and your plan advisor better assist employees in pursuing financial wellness with your retirement plan. The following are two key trends to consider.
Feelings About Financial Wellness
Given the inflation and economic uncertainty of the past few years, 64% of employees are stressed about their finances. In addition, only 42% of employees rate their financial wellness as good or excellent, the lowest since 2010. Interestingly, 96% of employers feel somewhat or extremely responsible for their employees’ financial wellness. However, just 2 out of 5 offer financial wellness programs.
Plan Sponsor Considerations: According to the survey, 42% of employers offering resources to support overall well-being have seen a reduction in employee stress. As a result, consider expanding the resources you offer employees based on what they highlight as most important in helping them better manage their finances. Those resources might include guidance and budgeting tools, guaranteed income plan benefits, tips for developing good financial habits, advice from a professional and expanded educational opportunities.
Demographic Differences Between Men and Women
The survey reports that while women have been gaining confidence about their financial wellness over the past few years, economic uncertainty is affecting the well-being of women more than men. Only 38% of women have felt financially well in 2023, a significant decrease from 2022 (55%) and a five-year low. While men have experienced a similar trend, women still trail men overall. In 2022, 59% of men felt financially well, which decreased to 48% in 2023.
Plan Sponsor Considerations: The survey recommends providing women employees with easy access to educational resources and tools to help them understand the actions they can take to improve their financial wellness. Women are more likely to value workplace benefits that offer greater flexibility, allowing for increased work-life balance and ability to attend to caregiver responsibilities. When it comes to addressing other demographic differences and needs (such as ethnic or generational groups), the survey suggests offering tools that can provide a more individualized experience for your employees and help them take action to improve their financial health.
Bank of America’s 13th Annual Workplace Benefits Report can be found at https://tinyurl.com/4c8bbjx7. The survey also covers trends regarding employee retirement healthcare savings, Social Security awareness and knowledge, the impact of caregiving on the workforce and much more.