Your Employees Can’t Focus — and Money Worries Might be Why

Your Employees Can’t Focus — and Money Worries Might be Why Jan 4, 2023 11:45:03 AM Financial anxiety is impacting workers’ ability to do their jobs. Here’s how the benefits you offer can do something about it. From stock market whiplash to escalating inflation, the past year provided plenty for your workers to worry about with respect to their finances. And while you might think they can keep calm and carry on, new research by Betterment at Work is showing these worries are impacting their productivity. More than half (54%) of the 1,000 full-time U.S. employees surveyed in our latest Financial Wellness Barometer say financial anxiety makes it difficult for them to focus at work. So what’s an employer to do beyond increasing base pay? You’d be surprised how much benefits can help. In addition to offering a barometer of workers’ overall financial wellness and the unique struggles they face, our annual survey zeroes in on the benefits employees value most. Financial Wellness Barometer 2022 Our survey found that while turnover has cooled since a year ago, it’s still well above average, showing the Great Reshuffle is far from over. More than half (54%) of workers surveyed would be enticed to change jobs for better benefits. Which benefits exactly? A 401(k) is mentioned most often among desirable financial wellness benefits, but it’s not the stopping point. Hot on its heels are two other benefits, with each one illustrated by a troubling trend. Breaking the retirement bank, in case of emergency An alarming number of surveyed workers (more than one-in-four) tapped into their retirement accounts to pay for short-term expenses. This behavior not only has big implications for their retirement goals, but can quickly become a bad habit. Instead of getting a high yield on cash set aside for short-term expenses, like the variable 4.25%* offered in a Betterment Cash Reserve account, savers who dip into their retirement accounts early are, with few exceptions, slapped with a 10% penalty by the IRS. All of this points to a notable lack of emergency funds—and explains why an employer-sponsored emergency fund is the second-most desired benefit beyond a 401(k). These funds act similar to a 401(k), with contributions automatically coming from a worker’s paycheck, albeit without the tax benefits of a retirement account. At a minimum, employers can help educate their workers on emergency funds and how to build them. Feeling the squeeze from student loans Nearly half of Millennial and Gen Z workers surveyed currently hold student loan debt — and a lot of it. Among all workers surveyed who hold this type of debt, the majority (59%) owe at least $10,000. Payments on federal student loans may still be paused through at least the first half of 2023, but the previously-announced $10,000 of debt relief on said federal loans is now in limbo. And with this much student debt saddling Americans, saving for retirement will likely continue taking a back seat to paying down student loans. This also shows why greater employer support would be welcome in this space. That support can take the form of 401(k) add-ons like our Student Loan Management.