Financial fears are keeping many Americans up at night.
Despite improvements in the economy, average Americans are a bit more concerned about financial issues than they have been in recent years, says a new Gallup study.
Gallup survey participants have been annually asked to express their level of concern regarding seven financial issues, and 2016 results reveal that worries are “slightly higher” in all categories.
“Significant increases” of worry were noted in the ability to pay emergency medical costs (60%) and capacity to maintain one’s current standard of living (51%).
However, the largest worry is not having enough money for retirement: 64% of respondents had this concern in 2016 compared to 60% in 2015.
Several recent surveys measure levels of consumer concern when it comes to personal finances. What can you do to help your members?
‘Worry is a cycle of inefficient thoughts whirling around a center of fear.’ --Corrie Ten Boom, author
An article at time.com discusses “Why Retirement Reality Is Finally Sinking In for Baby Boomers,” providing one possible explanation for inadequate retirement funding.
Boomers, it seems, are overwhelmed.
“Years of poor savings, rising health-care costs, and a tepid [economic] recovery have left many older Americans so frustrated that they are basically giving up on their dreams.”
A report from the Insured Retirement Institute notes the share of boomers who are “satisfied with their economic situation” has dropped the last four years. Only 43% are satisfied this year, compared to 79% in 2012.
Forty-five percent of boomers have no retirement savings. Just more than half of savers have $100,000, “all of which suggests that few boomers had significant amounts invested in stocks during a record bull market run.”
Plus, earnings haven’t budged as health care costs zoom upward, further explaining the lack of savings.
Future health costs also weigh heavily on the minds of boomers. A 65-year-old couple can plan to spend $245,000 on health care in their golden years.
“Given these headwinds, it’s not surprising that morale is flagging and regrets are plentiful,” the article notes.
Boomers are further dismayed as “Student Debt Has Multi-Generational Impact on Financial Wellness,” according to Employee Benefit Adviser. “Outstanding student loans are also affecting baby boomers who may be helping their kids… instead of saving enough money to fund their own retirement.”
A PricewaterhouseCoopers study shows employees declare their top two financial worries center on inadequate emergency savings (55%) and the inability to retire when they would like (37%).
Almost half of millennials “find it difficult” to meet expenses, perhaps because 42% hold student loans and 79% say these loans “have a moderate or significant impact on their other financial goals.”
Student loan burdened millennials “are consistently stressed about their finances” and 41% tap credit cards to cover necessities.
“What Bills Do Americans Lost Sleep Over?” asks benefitspro.com. Lost sleep attributed to financial woes is a problem for over two-thirds of women and 56% of men.
People age 50 to 64 are most bothered by financial matters, but “the number reporting financial concerns drops dramatically after retirement age,” due to Social Security payments and Medicare coverage.
Here, 39% of consumers list retirement savings as the top financial concern.
One in four Americans says the cost of living is their top financial concern, according to GOBankingRates’ Financial Burdens Survey.
Despite low energy costs, housing prices are “fast-rising” and “many Americans are likely feeling pinched. Considering that housing is typically the biggest expense for most households, it makes sense that many consider their cost of living to be high even though other consumer prices are actually low now.”
Other areas of financial concern:
Life stage is influential in consumer financial views, reflecting short-term needs as opposed to long-term issues. Young millennials worry about funding college, older millennials find their wages inadequate, and Gen X is burdened with high taxes and high cost of living.
Per usual, boomers fret about retirement shortfalls and healthcare costs; a shared concern for seniors.
‘Forget the past. The future will give you plenty to worry about.’ --George Allen Sr., coach
A “Sense of Financial Uncertainty Prevails,” says a CUNA blog post. The 2016 Workplace Benefits Report by Merrill Lynch shows consumers experience reduced financial wellness. Forty-one percent report they are “not at all secure” in their finances, up from 31%.
Three of ten have unmanageable debt, 80% would find three months away from work a “difficult or major crisis,” and 77% say soaring healthcare costs prevent greater retirement saving.
Further commentary on the Merrill Lynch report is found at Forbes, in an article that indicates financial worries are burdensome for all ages.
“While the economy looks like it has improved, there are other factors weighing on peoples’ minds.”
Many workers fret about job security, minimal wage increases, climbing costs of healthcare, and “struggle to balance long-term financial planning with shorter-term needs.”
In all, less than 25% of all generational cohorts are in “total control” of their financial situations.
Those who have understanding of future needs feel more in control.
See an infographic reporting on the 2015/2016 Global Benefits Attitudes Survey. “While the financial situation has started to improve for employees in the U.S., long-term financial worries linger. This creates financial anxiety that, in turn, affects employee productivity, engagement and satisfaction.”
Seventy-six percent of survey participants think they will have a less comfortable retirement than their parents, and 20% say financial problems have a negative impact.
Employees react to financial concerns in four ways:
1. Unworried: 48%, primarily older males with high salaries;
2. Worried about the present: 10%, younger males and women with higher salaries, frequently with kids under 18;
3. Worried about the future: 20%, usually early and late career women with average salaries; and
4. Struggling: 22%, apt to be women in mid-career earning lower salaries.
Financial worries affect absenteeism and engagement at work, and contribute to stress.
Employers can help by identifying and understanding needs of the labor force, designing valuable benefit plans, personalizing budgets to allow for choice, and issuing appropriately timed communications to help employees save.
Finally, some employers assist staff with financial literacy programs, per Employee Benefit Adviser. Although 66% of workers confront challenging debt, 60% struggle to save for retirement, and 48% are troubled to meet the bills, “only 14% of employers are including financial education in their benefits budget, while another 22% are considering it.”
Evidence shows such programs are beneficial. Of companies offering them, two-thirds say they are successful—according to employees. Favorite services are consultations, classes and online resources.
“Worry is interest paid on trouble before it comes due,” said author William Ralph Inge.
Consider what you might do to redirect members’ thoughts to interest paid on better investments.