Fi­nan­cially stressed work­ers likely to draw on re­tire­ment

Employee Benefit News - - Contents - By Nick Otto EBN.

Em­ploy­ees who say they are not fi­nan­cially fit may be more prone to mak­ing poor re­tire­ment plan­ning choices. But em­ploy­ers have the op­por­tu­nity to step in and make a dif­fer­ence, ex­perts say.

Fi­nan­cial stress is tak­ing

its toll on em­ploy­ees, caus­ing them to par­take in rather risky money be­hav­ior: tap­ping into their 401(k) or other re­tire­ment sav­ings in an at­tempt to get back on track.

More than half of work­ers (54%) who iden­tify as be­ing fi­nan­cially stressed say they will likely use their re­tire­ment funds for ex­penses other than re­tire­ment, ac­cord­ing to PwC’s 2018 Em­ployee Fi­nan­cial Well­ness Sur­vey. That’s com­pared to 33% of their col­leagues who say they’re not stressed about fi­nances.

“Our sur­vey in­di­cates that the main rea­son peo­ple in­vade their re­tire­ment plans is due to an un­ex­pected ex­pense, emer­gency and/or to de­fray med­i­cal ex­penses,” Kent Al­li­son, na­tional leader, em­ployee fi­nan­cial ed­u­ca­tion and well­ness prac­tice at PwC, tells “Not hav­ing enough set aside for an un­ex­pected ex­pense has been the No. 1 cause of fi­nan­cial stress since we started our sur­vey.”

Over­all, PwC found 47% of all work­ers say they are stressed about fi­nances. Though that’s a slight im­prove­ment from pre­vi­ous years (53% said they were stressed in 2017; 52% in 2016), the sur­vey re­sults are still alarm­ing. Al­li­son says smart em­ploy­ers will step in to ad­dress their em­ploy­ees’ fi­nan­cial wor­ries.

“Em­ploy­ers can make in­roads on both the re­tire­ment plan leak­age is­sue and the stress is­sue with more of a fo­cus on set­ting aside some funds as an emer­gency fund, in ad­di­tion to putting money away for re­tire­ment,” Al­li­son says. “This re­quires not only the com­mu­ni­ca­tion and ed­u­ca­tion to re­in­force the mes­sage but the mech­a­nism to do so, such as pay­roll de­duc­tions into a sav­ings ac­count.”

Ac­cord­ing to the sur­vey re­sults, just 31% of stressed work­ers say they’d be able to meet ba­sic ex­penses if they were out of work for an extended amount of time. Em­ploy­ees say they are stressed over un­cer­tainty re­gard­ing health­care. Many are pressed to sup­port both ag­ing par­ents and adult chil­dren.

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