Employees are shouldering a lot of financial stress as persistent talk of inflation, layoffs and economic uncertainty remains top of mind. Yet they may be hurting their long-term financial security if they let that unease get the best of them.
Morgan Stanley at Work's annual State of the Workplace report revealed that 66% of employees say
Younger employees in particular are more likely to skimp on their retirement, as 80% of millennials and 78% of Gen Z reduced their retirement contributions, compared to 58% of Gen X and 40% of boomer workers. Younger employees may lack a solid foundation of knowledge that could prevent them from making more prudent choices, says Craig Rubino, head of participant insights, financial wellness and learning at Morgan Stanley at Work.
"Many employees are probably still developing a baseline understanding of how to invest in general — many of these employees haven't gone through financial literacy education in high school or any type of finance training or learning," Rubino says. "Employees need to understand the trade-offs. Any actions they're taking today will have significant consequences on their nest egg down the road."
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A survey by Value Penguin revealed that 63% of employees don't understand how 401(k)s work — without a basic understanding of financial concepts around retirement and other financial topics, employees may feel like they can only focus on their immediate financial needs.
Yet employees are eager to learn. Morgan Stanley's research found that 92% of employees prioritize retirement planning assistance when considering where to work. Eighty-four percent of HR leaders understand that
"We recommend that employers play a big role in this process through education," Rubino says. "Providing things like webinars, workshops, access to one-on-one coaching and financial advisers can help employees make smart decisions around their finances, especially around their retirement plan."
But simply providingthe education means nothing if employees aren't engaging with the offerings. Instead of loading up a benefits plan with too many programs, employers should focus on one or two benefits that employees will actually use, Rubino says. Surveying employees to see what they actually need will save employers money and the headache of having too many benefits to manage.
"A lot of successful companies will survey their employees and collect data and then make smart decisions around it so they can focus on the benefits that are the most valuable for their employees," he says. "One desirable benefit is better than many benefits that employees aren't adopting or utilizing."
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One benefit that is in high demand is access to financial planners for a more personalized approach to short-and long-term strategizing. Morgan Stanley's survey found that 60% of employees say retirement planning assistance from financial planners is a high priority to them.
Beyond financial planning, employers must focus on stress management as core to many of these issues, Rubino says. Making sure employees feel supported in
"Given the current environment of inflation, and certainly the possibility of recession, employees are very fearful about their finances and they're asking for help," Rubino says. "HR leaders are getting a bit more creative about how they invest in their people around stress, and it's something they can often do at no cost with a comprehensive toolkit of education at their disposal."
