Financial stress is a reality faced by the American worker every day—its ripple effects impacting individual health, productivity, and quality of life.
In May, 2014 New York Life Retirement Plan Services sponsored a research study, in which they surveyed more than 1,500 workers to uncover individual stress levels, its causes, and how to best combat it.
How stressed are we?
Quite simply—we are very stressed. Nearly three-quarters of survey respondents admit to experiencing stress in their daily lives—and more than 25% report feeling extremely stressed. And when asked to identify the causes of stress, financial worries bubbled to the top:
- 60% worry about possible financial difficulties
- 47% are concerned with facing potentially unaffordable medical expenses
- 46% fear possible job loss
Only half of all survey respondents considered their financial situation to be good.
The impact of stress:
Stress is not something to be taken lightly. It impacts the individual and their employer.
- The World Health Organization estimates the cost of stress to U.S. businesses to be $300 billion annually.¹
- Productivity losses related to personal and family health problems cost U.S. employers $1,685 per employee per year, or $225.8 billion annually.²
- One in four workers reports that financial stress distracts them at work.³
The different faces of stress
Individuals identifying as highly stressed people are aware that they are not taking action to rectify their financial situation. 58% of highly stressed respondents admitted showing poor effort in saving for retirement, and half report that they fail in the basics of budgeting.
Financial stress is not limited to low earners. More than one quarter of respondents earning more than $100,000 reported feeling highly stressed.
Women feel financial stress more acutely—34% of women responding to the study reported experiencing extreme stress, compared to 22% of men—and are significantly more likely to bring that stress with them to work.
Lower income workers—those earning less than $50,000—are more concerned with establishing an emergency savings than higher paid colleagues, establishing that safety net trumps retirement savings, day-to-day bills, and medical bill concerns.
Solving for stress
As it stands now, 70% of respondents see their stress levels staying the same or increasing in the next year. But can we change that?
By and large, respondents recognize the value of taking action, considering the act of establishing a financial plan the most helpful in reducing stress. A holistic financial plan—one encompassing basic financial skill sets like budgeting, savings, debt management, and retirement and investments—may effectively combat financial stress.
This means we must re-examine the best way to engage plan participants. Simply focusing on retirement planning in participant education and engagement strategies ignores the complexities of an individual’s financial life—and rings hollow and incomplete.
To successfully empower individuals to save for retirement, it is imperative that we utilize tools and advice to support the broad spectrum of their financial lives. In order to increase productivity and lower the healthcare costs associated with financial stress, we need to help reduce financial stress.
²Center for Disease Control, October 2013
³PwC Employee Wellness Survey, 2013