5 reasons for financial stress according to John Hancock

How is financial stress impacting employees? 5 things to know

March 17, 2022 5:30 AM

With workers facing another year in a pandemic, inflation rates hitting a 40-year high and gas prices surpassing its 2008 record, it’s fair to assume people are stressed. But what stressors are weighing on employees the most?

John Hancock’s annual Stress, Finances and Wellness report revealed that 71% of those surveyed have experienced stress, depression and loneliness in the past year, with 58% reporting that finances are the cause of their stress. In fact, respondents named economic conditions, retirement savings and credit card debt as their top three worries.

“We have fielded this survey for eight years, and we are always surprised by some of the findings that we see,” says Sue Reibel, CEO of John Hancock Retirement. “While workers are reporting that they’ve taken some positive short-term steps and are more optimistic about their financial situation than they were before 2020, they are struggling to make long-term decisions and feeling more stress than before the pandemic.”

For Reibel, this contradiction may be due to respondents being able to save on commuting, entertainment and travel expenses throughout the pandemic, which could have offered short-term relief. Regardless, workers are still burdened by looming financial challenges and uncertainties.

Here are five findings from John Hancock that delve into the state of financial stress for workers.

Who is feeling more stressed than others?

John Hancock found that of those who reported finances as a cause of stress, 87% have major debt, 73% have households that earn less than $50,000 a year and 72% are younger than 36 years old.

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U.S. consumer debt reached $15.6 trillion in 2021, with mortgages amounting to nearly $11 trillion alone, according to the Federal Reserve. Meanwhile, the U.S. Department of Education estimates that one in eight Americans carry student loan debt. Notably, student loans are most commonly held by people between the ages of 25 and 34, which could hint at the increased financial pressure experienced by younger workers. An average monthly student loan payment is nearly $400, according to EducationData.org.

Additionally, $50,000 a year may fall below a livable wage for many Americans. Personal finances resource GoBankingRates estimates that on average, Americans need to earn nearly $68,000 a year to afford necessities, savings and expenses related to entertainment and leisure. However, Housing Studies of Harvard University reported that one in four renters paid over half their income in rent in 2018 — a number that has likely gone up as rent has increased by over 4% in the last year alone, according to the Bureau of Labor Statistics.

Debt isn’t going anywhere

John Hancock found that over half of respondents with student loans also have credit card debt. In fact, credit card debt is the number one concern for people under 36 years old. Still, there is good news: compared to last year, respondents who reported debt as “not a problem” have increased by 15%.

“Although we see debt becoming less of a problem through the years, the report indicates that credit card debt is still a problem for some,” says Reibel. “We also see that women, those with student loans and households earning less than $100k per year are not paying off credit card balances in full each month.”

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This echos the fact that these groups are at an economic disadvantage. For example, John Hancock reported that women are 15% more likely to experience stress than men, just as they are likely to earn less than men. Women still make only 82 cents for every dollar a man makes, with Black and Latina women making as little as 65 cents to the dollar, according to the U.S. Department of Labor.

Retirement remains an uncertainty

While 13% more workers said they are on track to retire when planned than in 2020, there was a 10% increase in respondents who felt unsure of when they will retire. This uncertainty could be partly rooted in the fact that 68% of respondents are worried about affording healthcare in retirement. According to the Fidelity Retiree Health Care Cost Estimate, retirees will need $300,000 for healthcare expenses alone, even with Medicare.

Financial stress costs employers and employees alike

Forty percent of workers claim they would be more productive if they didn’t have to worry about their personal finances, according to John Hancock. And companies are paying for those worries.

“Financial stress continues to be prevalent at work, with 66% saying they worry about personal finances while on the clock, and nearly half responding that they worry about it on a weekly basis,” says Reibel. “Financial stress among workers is a real cost for employers and increases absenteeism and reduces productivity — and it's a cost that's gone up during the pandemic.”

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Payback's a bitch

In 2019, John Hancock estimated that the cost in financial stress per employee per year amounted to $1,918 in lost productivity and absenteeism. This number is now at $2,412.

Workers want help

John Hancock found that nearly 90% of workers want their employers to provide financial wellness programs, and 66% felt that access to a financial wellness program would make them more likely to stay with their current employer.

“The time to act is now,” says Reibel. “In the current environment, we see even more compelling reasons for employers to add additional financial wellness programs to their plans as a retention and recruitment tool. The signals we’re getting are clear.”