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The majority of U.S. workers are taking steps to prepare for a potential recession in 2023, including cutting back on day-to-day expenses and paying off debt. Preparations also include increasing savings and investments, looking for a higher-paying job or second job, and adjusting benefits during open enrollment.
These findings are part of The Hartford's Future of Benefits Pulse Survey that polled 900 full- and part-time employed adults over age 18 in November.
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As workers contemplate a possible recession, many are already living under stressful financial circumstances. More than half of U.S. workers indicated they are living paycheck to paycheck, which is contributing to not only financial stress but also negative impacts on mental health. The survey found two-thirds of American workers say their financial stress has increased during the past year, and more than half said financial stress negatively impacts their mental health. Younger workers (aged 18-34) are most negatively impacted (67%) vs. 36% of those 55+.
Furthermore, 39% of respondents said they have less than $1,000 in savings or no savings at all. Women, lower-wage workers and Black employees are more likely to have less saved, and younger and middle-aged workers are more likely to have less than $250 saved or no savings at all, the report found.
Related: Financial safety net: How employers can set up emergency relief funds for employees
While many people are focused on the present, it is also important to take a step back and think about what can happen long-term," says Laura Marzi, benefits expert and head of marketing for group benefits at The Hartford.
"With so many Americans living paycheck-to-paycheck, the income protection benefits many employers offer such as life and disability insurance as well as supplemental health benefits are crucial in helping working Americans when the unexpected happens," says Marzi.
Only one-third of workers surveyed by The Hartford recognize short-term disability insurance as a source of income if they were out of work for more than 12 weeks due to an accident or injury. Half of respondents said they would rely on savings to get through.
Year-round benefits education
"We recommend employers provide benefits education year-round, not just at open enrollment time, to remind workers about their benefits, how to use them, and to help them better prepare to make their selections during enrollment," says Marzi.
About one-third of respondents to the survey said they are comfortable talking about finances at work and a similar percentage want their employer to help them with financial coaching and support.
"The direct connection between financial stress and mental health underscores the importance of creating a transparent and inclusive workplace culture that encourages employees to come forward to seek support and take advantage of the resources available to them in the workplace," says Marzi. "I encourage employers to continue to provide a variety of programs or services to meet the needs of a diverse employee population, including leaning on local nonprofits and community organizations."
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM's Retirement Advisor magazine and LifeHealthPro online channel.
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