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.
The percentage of employees living paycheck to paycheck during the pandemic has remained steady at 37%, roughly the same as in 2019, survey results show. But in addition to the 25% reported deterioration rate, nearly four in 10 employees (37%) have been unable to pay bills, are carrying over interest charges for a sustained period, or have had to borrow money from family and friends to make ends meet during the pandemic.
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.
“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.
More than half of respondents (53%) cited saving for retirement as the major area they want help from their employer. Further, 40% say they are looking for financial literacy assistance since financial management has grown in importance in the past six months, according to the study. However, only a third of respondents (36%) say the tools and resources offered by their employers to help manage their finances meet their needs.
“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.”