Pandemic Spending Slowdown Eases Financial Stress: Survey

Despite a two-year pandemic, workers overall are more confident in their financial situation than they’ve been since 2014, according to findings in the eighth annual Stress, Finances, and Well-Being report released today by John Hancock Retirement. That said, overall stress still affects 72% of retirement plan participants surveyed, especially women (79%) and those 36 to 50 years old (77%).

Further, 71% responded said they had experienced stress, depression or loneliness during the past year.

“People find finances stressful and it can impact their life,” Sue Reibel, CEO of John Hancock Retirement, told ThinkAdvisor. “Yet a contradiction [we found] is that workers are saying that they’re seeing some positive short-term impacts on their financial life because they’ve been able to take some steps that have improved their financial situation.”

The online study of 1,162 workers, taken between Aug. 4, 2021 and Sept. 3, 2021, and conducted by Greenwald & Associates for John Hancock, found that 58% of respondents had financial stress. For example, 87% of those with major debt said their finances were a cause of stress, as said 73% of households making $50,000 or less, and 72% of people younger than 36.

Still, Reibel noted that during the pandemic people were able to curb spending, which led to short-term relief from financial stressors overall. She noted that a majority were feeling more confident in their financial decisions.

Further, the study showed a certain amount of “decision fatigue” in which workers were looking to employers, financial professionals and retirement providers to help them save more.

The study also found that workers were overwhelmingly pleased with having a workplace retirement program:

• 80% of respondents said they would not work for a company without a retirement plan;
• More than 90% see retirement plans as a crucial employer benefit;
• Roughly 66% stated that having access to financial wellness programs would make them more likely to stay with their employer.

The study also found that the costs of financial stress due to absenteeism and productivity loss affected the bottom line, which rose roughly 26% in the past three years.

Key factors in affecting those stressed over finances included holding student loan debt or having high credit card debt, Reibel pointed out. Those who don’t pay off credit card debt fully every month typically were women, people 50 and younger, those with student loans or households earning less than $100,000.

This of course can affect retirement plans. The survey showed that 43% of respondents were behind schedule in retirement savings while 38% were on track. However, 49% stated they still were expected to retire when originally planned while 24% said they would retire later than planned.

Leveraging Short-Term Positives

Companies, advisors and others need to leverage the positives developed over the past two years when more people weren’t spending as much due to the pandemic, Reibel said. One positive is since 2019 there’s been a 35% increase in financial wellness programs.

“There’s all kinds of educational webinars, quick bites and support offered within retirement programs [within companies],” she explained. “Two top things people are looking for are how to optimize their Social Security benefits and how to forecast their retirement income.”

She notes there are tools in many company programs that provide that information. Even today, the study found 58% do their own research, 31% ask financial professionals and 28% ask their retirement plan provider for help. She adds that they also want access to expertise on estate planning and finding out how to open emergency savings accounts.

Reibel added that the key for companies today is that retirement programs and benefits offered by companies are a way “to attract and retain talent, which is super hard right now.”

The study also found those respondents who said they had better support, either through financial advisors or financial well programs or both, were more likely to have a good to excellent financial situation, be able to make debt payments easily and be on track with their retirement program.

Other study findings included:

• 93% of respondents stated that personalized help on retirement expenses would help with retirement savings;
• The share of respondents using financial advisors rose to 36% in 2021 from 25% in 2019;
• 76% used a computer to access their retirement account at least quarterly;
• 37% use mobile apps to access their retirement account.

“Americans are understanding they have a big role to play in investing in their future, in their retirement,” Reibel said. “And top of mind is health care costs, and they understand it’s expensive. Now they are starting to connect the dots about ‘how do I make sure I have enough money to cover that?’”