When money issues hit workers, employers are the ones who pay

Study says businesses are losing up to $250B a year in lost wages

Plenty of Americans struggle with money. When they do so on the job, employers often pay the price with eroding productivity.

Global consultant Mercer recently estimated that workers spend roughly 150 hours annually on average, nearly three hours a week, worrying about money issues. This could be costing employers up to $250 billion in lost wages, Mercer said.

Whether those numbers are exaggerated or not, they do suggest the problems associated with financial literacy are more widespread than commonly thought.

Employer-provided financial wellness or well-being programs, which are distinct from more traditional workplace benefits including 401(k)-style retirement plans, can help. Such programs often provide budgeting assistance and guidance tackling specific problems such as studentloan repayment, credit management, learning about non-retirement savings vehicles and gaining access to loans.

The study, conducted in 2016 but publicized in more depth this month by Mercer, included feedback from more than 3,000 workers. Respondents said they spent 13 hours a month on average worrying about financial matters, though the median or midpoint figure was considerably lower, around five hours a month. The survey didn’t ask workers how they actually spent work time worrying about finances.

Money issues that people worry about, according to the study, include monthly expenses, saving for retirement, managing credit card debt and planning for or meeting long-term care costs.

The study made a distinction between employers’ simply supplying information compared to actually helping them gain confidence in handling financial matters. People who lack confidence often are paralyzed from taking even basic steps that could improve their finances, Mercer said. Employers can encourage these workers to take small actions that build confidence gradually. Aside from improving productivity, the programs can help employers by making it easier to attract and retain employees.

“If you or your competitors all have the same 401(k) plans and health benefits but you offer a way to help handle something like payday loans, that can make a big difference,” said Neil Lloyd, head of Mercer’s financial-wellness research in the U.S.

Financial wellness programs are gaining in popularity, though they trail well-being programs centered around physical/medical problems and those dealing with emotional health, Fidelity Investments says. In a survey this year of mostly larger companies, 84% of the employer respondents said they make some type of financial-security programs available, up from 76% in 2016.

Many of the new employer initiatives involve a blend of “financial, physical and social/emo- tional programs to provide maximum support” for employees and often are conducted in seminars. Mortgages, estate planning and insurance are other topics commonly addressed.

GENERAL STRESS REDUCTION

Employers in recent years have started to pay more attention to general stress as a workplace wellness issue, up there with actual injuries and illnesses, said Wendy Lynch, a Phoenix-based business consultant who focuses on human-capital issues. For example, she said more employers are helping their workers improve resilience, which involves learning to monitor and control emotions, solve problems better and “stay somewhat optimistic when things are going bad.”

Lynch also said some employers are putting more focus on soft job skills such as helping workers learn to listen better in an age in which email and other digital forms of communication have become widespread yet sometimes lead to misinterpretation and conflicts. Studies indicate up to 10% of total employer-borne health expenditures are stress-related, Lynch said. “If you have a workforce that’s stressed and not sleeping well, you won’t perform as well as a business, and you risk losing your best performers.”

The most common well-being programs are those tackling physical issues such as smoking or weight management, according to the Fidelity survey.

RETIREE HEALTH COSTS

Health and medical expenses are among the biggest outlays Americans face. To help people understand and plan for these costs in retirement, Fidelity annually estimates what a 65-year-old couple, retiring in the current year, might need to spend on these expenses throughout retirement. The 2017 estimate, released on Aug. 24, is $275,000, up from

$260,000 last year. Fidelity’s estimate includes expenses associated with Medicare premiums, Medicare co-payments/deductibles and out-ofpocket prescription drug outlays. It assumes enrollment in Medicare but doesn’t include the added expenses of nursing home or long-term care. The cost estimates assume men reaching age

65 will live until 86 on average, while women will live to 88.

One recent trend is that more employers are taking an active and broader role helping workers manage health and well-being and providing benefits that can help improve health and possibly lower costs during retirement. For example, more companies are offering health savings accounts, allowing people to set aside money for today’s health care expenses and invest for possible medical costs in retirement, Fidelity said. The funds in such accounts can accumulate long term.

Money issues that people worry about include monthly expenses, saving for retirement, managing credit card debt and planning for or meeting long-term care costs.