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Employee Perceptions

Employees' financial perceptions don't really match reality

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Perceptions vs reality of personal finance

The majority of employees report they are confident about their financial situation, however, personal finances remains their number one source of stress.


What explains this paradox? While employees say they are confident, their actions and circumstances do not match their perceptions.

Many are not successfully managing their short-term expenses, and therefore, are not on track to reach their long-term financial goals — causing a sense of financial insecurity that leads to stress.

Retirement planning plays a part in this as well. Overall, the average employee plans to retire at age 65, with over 1 in 5 (21%) planning to spend their retirement years travelling. Yet 1 in 4 (22%) are only planning for their savings to last up until 15 years.

This gap between what employees say and the reality of their day-to-day lives highlights the importance of educating employees and providing them with the right resources and tools to assess their true state of financial health.

This way, employers can encourage employees to better manage their finances to prepare for situations that are most likely to cause stress.

This disconnect is particularly noticeable among younger employees, who relative to their older counterparts, have a higher rate of overlap in feeling both in control of their finances and living pay to pay. Male, Gen Y and Gen X are more likely to feel confident in their financial situation, but in Gen Y’s case this is unwarranted as they are also more likely to live pay to pay.

This perception gap inhibits employees from truly understanding their financial situations and taking the appropriate action to plan and save.

63% of employees feel financially confident

and
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Over 6 in 10 employees feel they are in control of their finances

but
55% More than half (55%) of employees feel stressed at work more than half the time

with
#1 The #1 source of employees’ stress being ‘personal finances’

Employees perceptions of their financial situation

(% Agreement)

Employees who feel financially confident

Gen Z (Ages 18–22)
Gen Y (Ages 23–36)
Gen X (Ages 37–52)
Boomers (Ages 53+)
Overall (All ages)
46%
59%
65%
68%
63%

Employees who feel in control of their finances

Gen Z (Ages 18–22)
Gen Y (Ages 23–36)
Gen X (Ages 37–52)
Boomers (Ages 53+)
Overall (All ages)
54%
60%
62%
63%
61%

Employees who have a budget / plan on how they spend money

Gen Z (Ages 18–22)
Gen Y (Ages 23–36)
Gen X (Ages 37–52)
Boomers (Ages 53+)
Overall (All ages)
48%
60%
49%
52%
53%

Employees who are on track to achieve their financial goals

Gen Z (Ages 18–22)
Gen Y (Ages 23–36)
Gen X (Ages 37–52)
Boomers (Ages 53+)
Overall (All ages)
56%
53%
55%
51%
53%

Employees who pay off their credit card bills every month

Gen Z (Ages 18–22)
Gen Y (Ages 23–36)
Gen X (Ages 37–52)
Boomers (Ages 53+)
Overall (All ages)
46%
62%
69%
68%
66%

Employees who live pay to pay

Gen Z (Ages 18–22)
Gen Y (Ages 23–36)
Gen X (Ages 37–52)
Boomers (Ages 53+)
Overall (All ages)
44%
47%
29%
28%
34%

Saving for the future
Employees’ actions don’t match their desire to save for the future

Only 53% of employees have a budget or plan for how to spend their money on an ongoing basis — and actually stick to it.

Short-term financial sacrifices for a secure retirement
Making financial sacrifices

64% of employees say they are willing to make short-term financial sacrifices in order to have a secure retirement. This is consistent across age and gender. But...

Directly allocating pay to a savings account
Using a savings account

Only 56% of employees are directly allocating part of their pay to a savings account

Financial confidence between genders

There are other pronounced disparities between male and female, with female more likely than male to report living pay to pay — 37% to 31%.

The disparity between male and female increases further when looking at their confidence levels and savings.

Females are less likely to...

Feel confident in their finances
69%
57%
Feel in control of their finances
65%
57%
Be on track to achieve their financial goals
56%
50%
  • Male
  • Female

Short term needs vs long term goals

Many employees may prioritise their short-term needs at the expense of their long-term goals.

Immediate needs and future planning often compete for the same dollars, because of this, most employees — 63% — are behind on their retirement savings goals, even among those older employees nearing retirement.

Many younger employees have not even begun to put money away for retirement and just a quarter of boomers are on track to achieve their retirement savings goals – nerve-wracking as retirement fast approaches.

Surprisingly, among employees who are confident, only half are on track or have already reached their retirement saving goals. Due to their financial situation, employees are increasingly postponing retirement.

Financial wellness programs can do something salary and benefits alone cannot help employees better understand their financial situations and leverage their benefits, so they can take action to set themselves up for success today and in the future.

Employers do not currently place enough emphasis on these programs as a part of their benefits strategies.

By offering a financial wellness solution and connecting it to their benefits offering, employers have an opportunity to help improve employees’ financial health — and in turn, reduce employee stress and increase productivity.

Postponing retirement because of money problems
 
Gen Z
(Ages 18–22)
Gen Y
(Ages 23–36)
Gen X
(Ages 37–52)
Boomers
(Ages 53+)
Haven't started saving for my retirement yet
38%
27%
13%
8%
Significantly behind where I had hoped to be at this point
8%
19%
16%
19%
Somewhat behind where I had hoped to be at this point
21%
26%
32%
27%
On track for reaching my retirement savings goals
31%
23%
35%
30%
Have already achieved my retirement saving goals
2%
5%
4%
16%

Next page
Financial wellness programs benefit employees and employers

Chapter Two discusses the supply and demand of financial wellness progams in the workplace and how they benefit employers in the long term.

Read now
Employee Benefits Trends Study 2019

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