Employee Financial Wellness Inches Up After All-Time Low

Employees’ optimism about their financial well-being is trending up after hitting an all-time low last year, but bad news remains about workers’ financial state.

Fewer than half of U.S. workers (47%) feel financially well, up from 42% at this time last year, according to Bank of America’s annual Workplace Benefits Report, which surveyed nearly 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 vs. 63% in 2023). Many employees are taking proactive steps to improve their financial wellness, including limiting expenses (62%), paying down debt (43%), and adding to emergency funds (41%).

The slight rebound is good news, said Lorna Sabbia, head of workplace benefits at Bank of America, but it does come with a couple of caveats. For one thing, while overall financial well-being has inched up, the financial wellness gender gap continues to grow: Men reported higher rates of financial well-being than women (53% vs. 36%). Women’s financial well-being has steadily declined since 2023, with only 38% of women reporting they felt financially secure that year.

Additionally, employees expressed concerns about inflation, with 76% of workers saying that the cost of living is outpacing growth in their salary or wages, a big jump from the 67% who said so in June 2023. And 66% of workers said they feel stressed about their finances.

“There is still work to be done to address gender equity as women continue to report much lower financial wellness scores than men,” Sabbia said.

All in all, despite the uptick in employees feeling financially well, the fact that financial concerns continue to run rampant is not good, said Michael Woodhead, chief commercial officer of financial provider FinFit.

A recent survey from FinFit found that 3 out of 4 workers are living paycheck to paycheck, with minimal savings, mounting debt, and increasing anxiety. About 60% of respondents said they experience stress and anxiety when thinking about their finances.

Even though inflation has dropped from its red-hot pace, insiders said it doesn’t feel that way for most employees, with the compounding impacts of rising costs over time and still-high prices for many products having caught up to workers in a big way.

“That's why employers need to think about how to solve this problem,” Woodhead said. “Workers who are stressed are not as productive because they cannot focus on the minute-to-minute and day-to-day activities that are required for them to execute their job.”

Employer Support

Although employee financial wellness and optimism are trending upward, employees are still seeking support from employers in a number of ways, Sabbia said, especially caregivers and women, who on average report lower levels of financial wellness.

Bank of America said in its report that employers would be wise to offer the financial wellness resources that employees want most, including online financial tools, calculators, and/or 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, Bank of America found. With 1 in 2 employees carrying mortgage or credit card debt and 1 in 4 carrying student loan debt, employers are starting to explore ways they can support employees, with 37% now offering student loan repayment assistance.

“Employers should continue to offer the financial wellness support that employees want the most, including planning resources, digital tools, and platforms to help employees identify and meet savings goals,” Sabbia said.

Additionally, employers should prioritize education about retirement costs such as health care and how to save for those costs, given that Bank of America data found that employees may be underestimating those future expenses and have a limited understanding of how to leverage savings tools like health savings accounts.

“Ultimately, offering employees this guidance and education now will help them prepare for a smooth transition to retirement in the future,” Sabbia said.

Experts contend that providing better help will result in higher productivity and employee engagement along with better retention.

If employers were to offer the benefits workers desired, the majority of respondents to the FinFit survey said they would be more likely to stay at their company (80%), more likely to recommend their company as an employer (78%), less likely to seek new roles outside the company (68%), and more engaged in their work (65%).