By Fabrice Pierre-Toussaint
Seems as if the vast majority of employers think that their workers are struggling when it comes to personal finances. While employers are doing more to help ease their financial situations, these companies nonetheless are still falling short. Around 8 in 10 employers that offers a workplace retirement plan such as a 401(k) think their employees are struggling financially, that is according to a recent observation by MassMutual. Part of the top 10 mutual insurance companies in the United States. Una Morabito, the head of client management at MassMutual said “It’s a bit of an epidemic, Employees are struggling with financial wellness.”
The analysis comes at a time when workers are taking more individual responsibility over several areas of their financial life. Includes saving for retirement and health-care costs. Things that employers might have helped with more in the past. According to CNBC, workers have the biggest problems with credit card and other consumer debt, housing costs and being unable to save for emergencies.
Countless companies have cloaked their pension plans throughout the past decades to favor 401(k) plans, while shifting to high-deductible health plans that comes with health savings accounts. That allows employees to save up for medical bills. Fidelity Investments noted that a 65-year-old couple retiring this year will need around $285,000 to cover out-of-pocket medical costs in retirement. The U.S population has had to adjust to those changes during a steady increase in life expectancy. It means that they have to stretch retirement savings over a longer period of time and increases the likelihood that they need to pay for pricey services that comes with old age. Nursing-home care is an example.
Childcare expenses and difficulty in saving for retirement are another.According to the 2018 National Financial Capability Study, which publishes every three years by FINRA Investor Education Foundation. Around 10% of homeowners owe more on their mortgage than its current market value. A large portion, 35% of those with credit cards only made the minimum payment of their debt throughout the months over the past year. That practice that inflates borrowing costs. 53% of firms are now offering a workplace financial wellness program. Twice the number from four years prior. Those programs were introduced as employers come to realize that their employees financial stress negatively impacts productivity. Some examples include online financial tools that covers budgeting and debt management to even advice from financial planners. Even despite constant low unemployment and nominal wage growth, few employees feel their compensation is keeping up with the cost of living, according to pwc.com. 2 out of 5 U.S. adults have trouble covering even a $400 emergency expense, according to the Federal Reserve. Millions of families still live paycheck to paycheck, even the ones with six-figure incomes. The idea of employer provided emergency accounts and services is gaining momentum. Experimenting with matching funds, payroll deductions and other services to provide the assistance for employers to build their emergency savings.