Betterment at Work Survey Finds Over a Quarter of Employees Dipped Into Retirement Funds to Pay for Short-Term Expenses This Year

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Dec 14, 2022, 09:00 ET

Challenging economic environment takes a toll on employees, making financial wellness benefits even more critical for worker satisfaction and productivity

NEW YORK, Dec. 14, 2022 /PRNewswire/ -- This year's prolonged market volatility, combined with record levels of inflation, have created a set of financially challenging circumstances for many people. On top of this, workers are also facing uncertainty around job stability within the current economy, navigating a turbulent housing market, and closely watching the unknown future of student loan forgiveness in Washington.

A new survey from Betterment at Work finds that with financial pressures on the rise, workers are craving financial stability above all — and they're looking towards their employers for more support than ever. The report, which also tracks key data from 2021, polled 1,000 full-time U.S. employees to measure how employees are faring financially, the benefits they desire most in the current climate, the type of support they want their employers to offer, and how these trends have shifted year-over-year.

Key findings of Betterment at Work's Financial Wellness Barometer include:

Employee financial wellness is on a notable downward trend:

Retirement accounts have taken a hit: three-quarters (75%) of employees say that market volatility has impacted their retirement account's balance, and over a quarter (28%) dipped into their retirement savings to pay for short-term expenses this year.
40% of employees rated themselves as financially stable, a 9 percentage point drop from last year.
Only 59% of employees currently have an emergency fund (a 7 percentage point drop from last year), leaving 41% without any sort of safety net.

Financial challenges are impacting people's mental health, and their ability to do their jobs:

Over two-thirds (71%) say their finances cause them anxiety, and 54% percent of employees say that this anxiety has made it difficult to focus at work.
Inflation and student debt are major causes: 88% say that rising costs of living have notably increased their financial anxiety this year, and nearly three-quarters (71%) reported feeling financial anxiety regarding their student loan debt.
Women are more stressed than men: 77% of women say finances cause them anxiety, vs. 63% of men.

Shining a spotlight on student debt:

Almost half (44%) of employees surveyed do not feel ready to resume payments when the moratorium lifts, and women feel 20% less prepared than men.
Employees are making sacrifices to prepare to restart payments: 42% have cut down on dining and entertainment, 32% have skipped a vacation this year and 24% have lowered the amount they invest.
Two-thirds (67%) feel that their student debt has impacted their ability to save for retirement.
Meanwhile, over a quarter (27%) of employees surveyed are currently putting money towards a college fund — yet less than half (45%) of them are using a 529 to save.

There's opportunity for employers to do more:

A 401(k) and 401(k) match remain the two most highly sought-after financial benefits. However, only 52% of employees surveyed have access to a 401(k) — a number that drops to 39% for small business workers.
68% of employees indicated that financial wellness benefits are more important to them now than they were a year ago — other highly desired benefits include access to an FSA and HSA, an employer-sponsored emergency fund, and student loan offerings.
Yet, just under half (45%) feel that their employer is committed to supporting their financial wellness, showing there's room for employers to provide value and demonstrate their support.

"The shifting economic tides have impacted employees and employers in different ways. Many workers are struggling with new challenges and financial anxiety, meaning financial wellness benefits have become more important than ever. Meanwhile, companies are focused on sustainable growth and investing intentionally in their employees," said Kristen Carlisle, General Manager of Betterment at Work. "This presents an opportunity for employers to reexamine their benefits packages and gauge whether their current offerings are truly meeting the evolving needs of employees. A great financial wellness package doesn't need to provide every benefit under the sun, but rather, a curated selection of the benefits that will make the most impact."

"For example, as we look at employee retirement readiness, it's evident that greater employer support and guidance is needed. A significant portion of workers had to tap their retirement accounts to pay for short-term expenses, pointing to a notable lack of emergency funds. Two-thirds said their student debt has impacted their ability to save for retirement — and on top of that, nearly half of employees still don't have access to a workplace retirement plan," Carlisle added. "As employers evaluate how they can best support employees' near-term and long-term savings goals, offering a 401(k) should be the baseline but not the stopping point. The good news is high quality benefits packages are no longer expensive and out of reach, no matter your company's size."

Read or download the full report here.

Methodology
An online survey was conducted with a panel of potential respondents from October 7, 2022 to October 12, 2022. The survey was completed by a total of 1,000 respondents who are 18 years and older, and full-time employees. The sample was provided by Market Cube, a research panel company. All respondents were invited to take the survey via an email invitation. Panel respondents were incentivized to participate via the panel's established points program, regardless of positive or negative feedback. Participants were not required to be Betterment clients to participate.

Findings and analysis are presented for informational purposes only and are not intended to be investment advice, nor is this indicative of client sentiment or experience.

About Betterment at Work

Betterment at Work is an investing and retirement savings solution designed to empower employees on their journey to financial wellbeing, using our 401(k) solution as the foundation. Built on the same technology that powers our digital investment advisor platform, Betterment at Work helps employees meet goals beyond retirement, with customizable portfolios, student loan management, easy-to-understand advice on how to save, and more. Our automation aims to simplify offering a 401(k) — at one of the lowest costs in the industry — and Betterment takes on the fiduciary responsibility for employee accounts, supporting personalized choice with expert management. For more information, visit www.betterment.com/work.

Media Contact: [email protected]

SOURCE Betterment at Work