What is Financial Wellness?

For many people, managing finances is a significant source of stress and anxiety. A study by the Financial Health Network (FHN) reveals that employees of all income levels struggle with budgeting, managing debt and emergency savings.¹

In turn, stress can directly impact employee productivity. Four in five workers report feeling distracted at work due to the stress of their financial situation.²

The Costs of Stress

Near term: Distracted employees are costly. Nearly half of those who reported feeling distracted by their finances say that they spend three hours or more each week thinking about or dealing with personal finance issues while they are at work^.3 Over the course of a year, a full-time employee may spend 156 hours (or 19.5 days) distracted from work because of personal finance issues. Based on the average American hourly wage, that’s $3,922 or more per employee each year.⁴ And the more employees you have, the more it adds up.

Long Term: Many employees expect that they will need to delay retirement to make up for a lack of savings. Employee Benefit Research Institute’s (EBRI) annual Retirement Confidence Survey, the longest running survey of its kind, shows that Americans, now more than ever, are expecting to work past the age of 65.⁵

So how does this effect your business? There are multiple components that factor in to the cost of delayed retirement, including wages, health care costs and workers’ compensation. No matter how you slice it, the cost is substantial. According to research, even year beyond the average retirement age results in: ⁶

• Incremental annual workforce costs of about 1.0%–1.5% for an entire workforce
• An incremental cost of over $50,000 for an individual whose retirement is delayed. This represents the cost differential between the retiring employee and a skilled replacement.

Challenge the Status Quo
For decades, employer-sponsored benefit packages have included retirement savings and health care, but often, that is where the benefits stopped. This binary solution had good intentions; however, employees are looking to you for Financial Wellness benefits that help them better manage their finances. When developing a Financial Wellness program, it is important to focus on holistic solutions that empower your employees to view their finances as a source of wellness—not a source of stress. When properly implemented, these programs can help improve loyalty, satisfaction and company culture. Three out of five employees say they’d be more likely to stay at a job if their employer offered Financial Wellness benefits.⁷

Address Multiple Needs
To understand the path to wellness, you have to first understand the areas in which your employees need help. While retirement savings and planning for the future continue to be top priorities, employees also express a strong desire for support in:⁸

• Building emergency savings
• Choosing and monitoring investments
• Managing bills and spending
• Improving credit
• Managing debt
• Assessing insurance needs and coverage

Everyone is on a different leg of their financial journey, which means each employee needs access to personalized information and tools. Morgan Stanley’s Financial Wellness Program offers dynamic education though an online portal, where employees and their families can measure and improve their financial well-being, while being matched with educational materials that address their individual needs.

Better Together
Helping your employees take control of their financial lives is a win-win. By offering holistic Financial Wellness benefits, you can encourage employees to take control of their financial situations and get the support they need. Set yourself apart as a preferred employer. Improve your employee retention and communication by helping your workforce manage and reduce financial stress.