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‘Sharp Declines’ in Financial Progress: Report

Industry Trends and Research

Employees’ financial situations and mental health are bearing the brunt of the burden of a year where economic uncertainty and inflation have upended saving and spending habits, according to a new report.

"With market declines across asset classes in 2022 and the potential for a recession dominating news coverage, 70% of respondents say they’re worried a great deal about the economy,"John Hancock Retirement said. "The most frequently cited issues were concerns about the impact of inflation on the cost of living, general economic conditions, and rising interest rates."

Nearly all respondents have taken note of rising costs in the past six months, with the vast majority reporting increased spending on groceries, household basics, gas, and monthly bill payments.

Beyond concerns about economic conditions, in general, more than half (of workers are significantly worried about one or more aspects of their personal finances, with some of the frequently cited being saving too little for retirement, credit card debt, and building emergency savings.

These financial worries are coupled with a noteworthy decline in participants’ financial situations to below pre-pandemic levels. Employees are now more than twice as likely to describe their personal finances as fair or poor as they are to call them good or excellent.

As household budgets are strained by inflation, one in three respondents say it’s currently challenging for them to save money, and one in five have dipped into their savings to afford day-to-day necessities.

“Coming out of the pandemic, we were hopeful to see continued improvements in financial well-being, but our results showed how quickly an uncertain economy can take those gains away,” Aimee DeCamillo, head of Global Retirement at Manulife Investment Management, said in a statement. “We did see some resilience, however—despite their financial strain, more than 70% of respondents said they’ll be focused on growing, maintaining, or investing their savings in the coming months, with almost half citing paying off debt and planning for retirement as short-term goals.”

John Hancock found that workers who engage with their retirement plans digitally—by logging in to the plan website or opening email communications from their plan—are more likely to report that they’re in good financial shape and on track for retirement than their less engaged peers. The plan participant data shows that employers that can engage their employees regularly with relevant, timely information may be helping them take financial action, including increasing their retirement contribution rates.

In addition, employees themselves say that financial wellness programs reduce their financial stress, make them more likely to stay with their employer, and make them more productive.