Optimism about employees’ financial well-being is on the rise after hitting an all-time low last year, but bad news remains about workers’ financial health.
Just under half of U.S. workers (47%) feel financially well off, up from 42% at the same time last year, according to an annual Bank of America survey. Workplace Benefits Reportconducted a survey of approximately 1,000 employees and more than 800 employers.
Meanwhile, fewer employees are concerned that economic uncertainty will affect their long-term retirement savings (53% now, compared to 63% by 2023). Many employees are taking proactive steps to improve their financial health, including curbing spending (62%), paying down debt (43%) and building up an emergency fund (41%).
Lorna Sabia, head of workplace benefits at Bank of America, said that while this slight recovery is good news, there are some caveats. First, while overall financial well-being is slowly improving, the gender gap in financial well-being continues to widen. Men report greater financial well-being than women (53% vs. 36%). Women’s financial well-being has been declining steadily since 2023, with only 38% of women reporting being financially stable that year.
Additionally, employees are expressing concern about inflation, with 76% of workers saying the cost of living is outpacing salary and wage growth, up significantly from 67% who said so in June 2023. Additionally, 66% of workers said they are stressed about their finances.
“There is still work to be done to address gender equality as women continue to report much lower financial wellness scores than men,” Sabia said.
Overall, it’s not a good thing that money worries are still so prevalent despite more employees feeling financially secure, said Michael Woodhead, chief commercial officer at financial services firm Finfit.
A recent survey by FinFit found that three in four workers are running out of money before payday, leaving them with little savings, mounting debt and increased anxiety. Nearly 60% of respondents said thinking about their money makes them feel stressed or anxious.
Though inflation has slowed from its rapid pace, officials say the combined impact of long-term cost increases and still-high prices for many products has hit workers hard, and most are not feeling it.
“That’s why employers need to think about how to solve this problem,” Woodhead says. “Stressed workers are less productive because they can’t focus on the minute-by-minute daily activities they need to get their jobs done.”
Employer Support
Despite the upward trend in employee financial well-being and optimism, employees still look to their employers for support in a variety of ways, Sabia said, with caregivers and women, in particular, reporting lower levels of financial well-being on average.
In its report, Bank of America said employers should provide the financial wellness resources employees most want, such as online financial tools, calculators and scores to measure and improve financial wellness, retirement education and planning resources, and education to develop financial skills and good financial habits.
Debt assistance is also emerging as a priority for employees, according to a Bank of America survey. With one in two employees having mortgage or credit card debt and one in four having student loan debt, employers are beginning to look for ways to help their employees, with 37% now offering student loan repayment assistance.
“Employers need to continue to provide the financial wellness support their employees want most, including planning resources, digital tools and platforms to help them identify and reach their savings goals,” Sabia said.
Additionally, Bank of America data shows that employees may underestimate future expenses and have limited understanding of how to take advantage of savings tools like health savings accounts, so employers should prioritize education about retirement costs like health care and how to save for those expenses.
“Ultimately, providing this guidance and education to employees now will prepare them for a smoother transition into retirement in the future,” Sabia said.
Experts claim that providing better support leads to increased productivity and employee engagement, which in turn improves employee retention.
The majority of FinFit survey respondents said that if their employer offered the benefits employees want, they would be more likely to stay with the company (80%), more likely to recommend the company as an employer (78%), less likely to seek a new role outside the company (68%), and more engaged in their work (65%).
