If we've learned any lesson over the past year, it's that no matter
how carefully we plan and prepare, we'll likely encounter
unexpected hurdles. While a global pandemic has certainly
underscored the need to pay close attention to our physical
wellness, it has also revealed the need to shore up our financial
wellness.
According to PwC's 9th Annual Financial Wellness Survey
conducted in January 2020, financial matters were the top
cause of stress for employees even well before the pandemic
hit in earnest. More than one-third of full-time employed
millennials, Gen Xers, and baby boomers had less than $1,000
in emergency savings. Only 29% of women said they would be
able to cover their basic necessities if they found themselves
out of work for an extended period, compared with 55% of men.
And more than half of millennials and Gen Xers and 35% of baby
boomers said they would likely use their retirement funds for
something other than retirement, with most noting it would be
for an unexpected expense or medical bills.1
Although tapping your retirement savings can help you
get through a crisis, it can hinder your ability to afford a
comfortable retirement. Having a plan to guard your financial
wellness throughout your working years can help you avoid
putting your retirement at risk.
The Consumer Financial Protection Bureau (CFPB) defines
financial well-being as:2
- Having control over day-to-day and month-to-month
finances. In order to achieve this, your expenses need to be
lower than your income.
- Maintaining the capacity to absorb a financial shock. This
typically refers to having adequate emergency savings and
insurance.
- Being on track to meet financial goals, meaning you have
either a formal or informal plan to meet your goals and you
are actively pursuing them.
- Having the financial freedom to make choices that allow
you to enjoy life, such as a splurge vacation.
The CFPB has identified several key factors that contribute to
an individual's ability to achieve financial well-being. Among
them are: (1) having the skills needed to find, process, and
use relevant financial information when it's needed; and (2)
exhibiting day-to-day financial behaviors and saving habits.
Many employers have begun offering financial wellness
benefits over the past decade. These programs have evolved
from a focus on basic retirement readiness to those addressing
broader financial challenges such as health-care costs, general
finance and budgeting, and credit/debt management.3
If you have access to work-based financial wellness benefits, be
sure to take time and explore all that is offered. The education
and services can provide valuable information and help
you build the skills to make sound decisions in challenging
circumstances.
In addition, a financial professional can become a trusted
coach throughout your life. A qualified financial professional
can provide an objective third-party view during tough times,
while helping you anticipate and manage challenges and risks
and, most important, stay on course toward a comfortable
retirement.
If you have questions about your financial
goals, please contact me or schedule an
appointment at your local Bank Office.
©2021 Broadridge Investor Communication Solutions, Inc. All rights reserved. 1PwC, May 2020 2Consumer Financial Protection Bureau, January 2015 3Employee Benefit Research Institute, October 2020