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Workers are Worried about their Finances and Employers Can Help

American Workers Are Worried About Their Finances

American workers are worried about their personal finances; 45% of the people we recently surveyed said that worrying about personal finances kept them up at night. These respondents worried about personal finances more than any other issue, including concerns related to their jobs, health, and relationships.

Surprisingly, these findings are fairly consistent across income ranges. The respondents who earned less income were the most likely to worry about their finances, but even among the respondents with household incomes of $125,000 or more, 38% worried about personal finances.

Specifically, American employees need guidance on how much to save for emergencies, how to reduce their debt, and how to manage their cash flow. For example, just 38% of our survey respondents described their emergency savings as sufficient. More than half carry a credit card balance, which results in high-interest payments for debt servicing, and 19% identified debt as an impediment to achieving financial goals.

We also found that American employees have trouble with cash-flow management. Almost one-quarter of respondents indicated they had denied themselves basic necessities such as groceries or medical care because of financial difficulties. These results are consistent with other surveys on Americans’ financial fragility. The Federal Reserve Board has found in surveys that just 48% of Americans could cover an emergency of $400 with their current assets.

How Can Employers Help?

So, how do employers fit in? Without help, employer retirement benefits become a default emergency savings source. Fully 25 percent of workers have outstanding loan balances from their 401(k) accounts at any given moment. Without guidance on employer-sponsored health plans, workers won’t know how what is (and is not covered), nor how much they might be on the hook for if they have a medical emergency.

Employers that offer innovative guidance about how to best use their benefit programs in the context of each employees’ financial life could help their employees get the most from their paychecks—now and in the future.

 

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Aron Szapiro is director of policy research for Morningstar. Szapiro is responsible for developing research reports on policy matters, coordinating official responses to regulatory proposals, and providing investor-focused comments on policy issues to clients and the press. He also chairs Morningstar’s Public Policy Council. 

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