Generation X employees struggle the most financially and are more likely to dip into their retirement savings than the Baby Boomers or Millennials.
A new financial wellness survey by PwC US found that GenXers, or those born in the early ‘60s to early ‘80s, struggle the most when it comes to juggling competing financial priorities related to their homes, children and parents. More than one-third of them think they will need to tap into their retirement savings to pay for other expenses.
“Gen X employees are in a unique financial situation. They’re often faced with the full spectrum of financial issues – from having to fund children’s education to caring for aging parents – while dealing with day-to-day household expenses,” says Kent Allison, partner and national practice leader of PwC’s Employee Financial Education practice. “These competing financial pressures, along with already depleted equity in their homes, exacerbate America’s retirement crisis as employees believe they have no choice but to turn to their retirement savings to focus on short-term needs.”
Thirty-five percent of those surveyed said they thought they would be able to retire when they want.
Although overall employee financial stress across generations decreased to 52 percent this year from 61 percent in 2012, financial stress continues to impact employee productivity. Twenty-three percent admit that personal finances have been a distraction at work. Of those, 19 percent say they spend five hours or more at work each week thinking about or dealing with issues related to their personal finances.
The cost of health care still ranks among the top retirement concerns, with 38 percent of respondents listing it as their main concern. The fear of losing healthcare coverage drives an increasing number of people to delay retirement: 29 percent this year, up from 21 percent in 2012.
More than half of the employees (53 percent) with health insurance say they are covered by a high- or mid-deductible healthcare plan, a reflection of the rise of consumer-directed health plans. While employees are concerned about healthcare costs, only 35 percent of those covered by a high or mid-deductible plan contribute to a health savings account and of those, only 12 percent indicate they plan to use the funds as a means to meet future medical expenses in retirement.
Of the Baby Boomers planning to retire within the next five years, before the age of 65, two out of every three employees have a plan for covering their healthcare expenses before becoming eligible for Medicare. Forty-three percent of Baby Boomers are confident they will be able to cover their medical expenses in retirement.
Cash flow issues continue to top employees’ financial concerns, with anxieties about insufficient emergency savings for unexpected expenses (49 percent), delayed retirement (45 percent), and not being able to meet monthly expenses (22 percent) among the top concerns. Additionally, almost half (49 percent) of Gen X respondents find it difficult to meet their household expenses on time each month, as compared to 31 percent of Baby Boomers and 30 percent of Millennials.
PwC surveyed more than 1,600 full-time employees for its 2013 Employee Financial Wellness Survey.