EL SEGUNDO, Calif.-Despite gains in addressing their overall financial and retirement savings situations, a new analysis has found 84% of American employees remain under financial stress.
The good news: a Q2 study by workplace financial wellness program provider Financial Finesse found a "continued trend toward proactivity," as employees seek more control of their finances in advance of a crisis or problem.
The bad news: most are doing so because they have little choice.
Financial Finesse said 74% of the questions received by its team of financial planner professionals were proactive in nature, up from 69% in Q2 2011.
Bruce Young, senior resident financial planner, told Credit Union Journal the study shows people are still stressed by the economy's slow recovery, but their response is "they have to do something about it."
Retirement planning is the top financial priority for employees across most age and income groups, the study found, with related questions making up 32% of total questions received by its financial planners in Q2.
"So they are trying to figure out what they should be doing," said Young. "Fewer people are calling now with debt problems, and more are saying 'what if?' On the calls I have taken, people have figured out Social Security is up in the air, so they are trying to ensure they have somewhat of the lifestyle they want, as opposed to being reliant on others or not doing anything."
Financial education in general is becoming more "prevalent," he said, and people are experiencing their companies freezing 401(k) match programs and realizing they are "on their own."
Still Vulnerable
Despite the increased focus on financial and retirement planning issues, Financial Finesse said many employees are still vulnerable to a double-dip recession because they lack strong cash reserves or sufficient credit to get through layoffs or other financial emergencies.
The Q2 2012 study found 42% of employees are "uncomfortable" with their debt levels, 51% do not have an emergency savings account, and 84% report they are "under financial stress."
Young said housing still creates a "huge element of real stress" from people worried about losing their homes. In some cases homeowners have already modified their loans, but two years later they are stressed about making their new payment due to a change in circumstances.
There is at least one bright spot. Young said Financial Finesse is fielding fewer calls about credit cards, and those who do do not owe the amounts he used to hear.
"I think people have realized they can't go buy something they cannot afford and simply put it on their credit card," he assessed. "Overall, many people are just waiting for the election to be over in November, just so there is less uncertainty."
Young said CUs should be inviting their own staff to any financial education seminars they are offering to their members. One suggested topic: increasing emergency savings.
"Everybody hears they should have six-months' worth of cash to cover expenses on hand, but that is hard to do so it becomes frustrating," he said. "Teach people to break it down into smaller increments. Get them to save for one month of expenses. Once they have that, go for two months, and so forth."
