The reasons might not me new, but the increase in numbers is cause for alarm. Lingering cash and debt management challenges continue to weigh on employee confidence and overall financial wellness, according to PwC U.S.'s 2011 Financial Wellness Survey. Almost half (49%) of working American adults find it difficult to meet their household expenses on time (up from 43% in 2010).
Additionally, nearly one-quarter of employees surveyed report using credit cards to buy monthly necessities because they couldn't afford them otherwise, up nine percentage points from 2010. Fully half of survey respondents consistently carry balances on credit cards (in line with 51% in 2010), and 42% of respondents find it difficult to make minimum credit card payments on time (up from 28% in 2010).
Given these cash and debt management challenges, the authors write, it's no surprise that 61% of survey respondents say they find dealing with their financial situation stressful and 56% say their stress level has increased over the past 12 months. Meeting day-to-day expenses is now more of a concern than funding retirement.
"The results clearly show that retirement is not the most pressing financial concern weighing on employees' minds. In addition, the financial distractions and resulting levels of stress may cause a loss of productivity and have an impact on employee health," said Kent Allison, a partner in PwC's Financial Education Practice. "While it's important that employees put money aside for retirement, they may be hesitant to save for the future if it will exacerbate existing debt and cash flow problems in the near-term."
Despite corporate investment in programs to educate employees on retirement and investing and the implementation of auto-enrollment features in company retirement plans, employee confidence in their ability to retire "on time" remains low, with just 33% of employees surveyed confident they'll be able to retire when they want to and 46% of employees planning to retire later than they previously planned. What's more, 38% of respondents state they are saving less overall this year than last. Even more alarming, almost one third believe they'll need to use their retirement plans to pay for expenses other than retirement (education funding, home purchase, etc.).
"It's not enough to say, 'you should be saving for retirement' and auto-enroll your employees in a retirement program,’” notes Allison. “Competing financial issues could be preventing employees from saving for retirement, and it's important to understand why people aren't saving in order to address the retirement savings crisis and related workforce issues.”