1-in-4 workers’ finances have deteriorated due to COVID

It’s no secret that the COVID-19 pandemic has hurt employee financial wellness. Despite gains in the stock market in recent months, many employees say they will be delaying retirement plans.

As many as one in four employees say their financial situations have deteriorated because of the pandemic, according to Willis Towers Watson’s 2020 Global Benefits Attitudes Survey.

- Advertisement -

The data dovetails with a recent report from John Hancock Retirement that found employee financial stress has doubled since COVID-19 began. The number of individuals reporting high levels of financial stress more than doubled from 11% pre-pandemic to 27% since the crisis struck, the survey of retirement plan participants found.

Also see: 2021’s 401(k) contribution limit

“The pandemic is clearly shining a light on the precarious financial state of many employees. While some employees are spending less and saving more, a disturbingly high portion (of employees) are being forced to tap into retirement savings to get by,” said Shane Bartling, senior director, retirement, at Willis Towers Watson.

But the report did find some silver linings.

Among the 22% of employees who say their financial situation is improving, almost six in 10 (58%) are likely to take an extended vacation after the pandemic ends, while half (50%) have major spending plans.

“The news is not all gloomy, as some employees, including lower-income wage earners, say their finances are improving,” Bartling added. “Many of these employees, especially those still struggling and living paycheck to paycheck, are ready to spend more after the pandemic is over.”

Many workers said they’re looking to employers for help with better long-term financial security–notably through a more generous retirement program.

Related: How many employers are suspending 401(k) matches?

- Advertisement -

“The opportunity for employers to play a critical role in helping employees improve their financial wellbeing and retirement readiness remains great,” said Steve Nyce, senior economist, Willis Towers Watson. “Investing in tools and resources, and educating and encouraging employees to use them, can go a long way toward reducing employee financial stress and boosting healthy outcomes and worker productivity.”

Avatar photo
Nick Otto
Nick Otto is HRE’s former senior digital editor. He is a professional communicator with more than a decade of demonstrated accomplishments in newspaper and trade publishing. He has spent the past five years covering the employee benefits space and holds a bachelor’s degree from the University of Florida.