Some days you can feel the tension throughout the office. Some bad news demonstrates just how fragile everyone's financial stability is. And suddenly no one can focus on work.

A coworker with a catastrophic illness is struggling to pay incidental expenses within his high deductible health plan. An employee's legal issues sap his resources and his productivity, causing him to borrow from his 401(k) defined contribution plan. A recent retiree isn't thriving on her limited retirement savings, and this calls into question everyone's retirement planning.

Despite health reform legislation, mutual fund company disclosure regulations and other employee benefit controls, workers are still not financially secure and confident in the support provided by their employee benefits, according to recent industry research funded by two leading financial education companies.

And that means that the benefits programs-both health plans and retirement savings plans-aren't doing the jobs they were designed for, the companies report.

A recent survey of 50 life and health insurance brokers, conducted by FinFit, LLC, in Virginia Beach, Virginia, a financial wellness consulting company, reveals that employers and their employees are more concerned than ever about their financial well-being and lack confidence in the power of their employee benefit plans to protect their financial stability.

What issues drive the anxiety? Health plans with limited options, higher deductibles and co-pays that can leave employees exposed to short-term financial losses, to name a few. A turbulent financial market also makes their nest egg fragile, the survey says.

The online survey, conducted in September and October, identified the insecurity among employers, employees and their agents and brokers, the company says.

About 60% of respondents said they have noticed greater concern among employers about the financial well-being of their employees since the beginning of the last recession, more than one-third of respondents (36%) attributed the anxiety to higher health insurance deductibles, almost half (46%) to higher health insurance premiums, and about 30% to the higher costs of mandatory health benefits.

Of the agents and brokers surveyed, 68% said they strongly believe employers are interested in new benefits that would help employees cover the cost of health plan premiums and deductibles. About 43% said they believe their client employers would be interested in offering small, short-term loans to cover health plan incidental expenses.
FinFit, which markets short-term loan benefits, also advises employers to increase use of financial education programs to prepare employees for financial challenges.

In the survey announcement, David Kilby, company president, said the survey results support FinFit's focus on financial education and the development of new benefits that fill in the financial gaps of standard benefit programs.

"We have recognized the pressing need for financial wellness programs in the workplace that help people better manage difficult financial circumstances and get back on track quickly," he said. "Unexpected emergencies can create a great deal of stress for individuals and families-especially those who don't have a savings account or access to cash."

Employees are also concerned about their future after retirement. After several years of improved confidence in the strength of retirement benefits and financial stability after retirement, employees began to believe that they are losing ground in 2014, according to Financial Finesse, a financial education consulting company in El Segundo, California.

The company's trend research is based on a compilation of questions and other information requests made by approximately one million financial education program participants in 600 organizations, analyzed by a panel of certified financial planners.

The data was supplemented by studies conducted by the Conference Board of Leading Economic Indicators, Aon Hewitt, Vanguard and the Transamerica Center for Retirement Studies.

In 2013, about 19.7% of employees said they were on track to meet their income replacement goals in retirement, up from 17.4% in 2012 and 16.6% in 2011. However, the retirement preparedness took a sharp turn downward in the first three quarters of 2014.

The analysis points to declines in investment confidence in 2014, particularly among millennial generation employees who are facing record student loan debt, and believe that the record stock market growth is unsustainable, according to an analysis by certified financial planners.

The certified financial planner panel also pointed to the lack of growth in real income in the first half of 2014 as undermining long-term confidence in retirement investment. "Unless there is a substantial uptick in confidence in the last quarter of 2014, the year will end most likely with lower investor confidence and fewer employees feeling like they are on track to reach their income-replacement goals on retirement," the report said.

Liz Davidson, chief executive officer and Financial Finesse founder further described the dilemma. "The uncertainty is an emerging problem, and one that both employers and employees will need to proactively address."

Retirement preparedness varies by demographics, income and other metrics, the study indicated. About 28% of all employees reporting $100,000 in household income are confident they will achieve their retirement income goals, up from 23% in 2012. About 26% of all men say they are on track, same as the past two years.

However, only 17% of women are confident they will reach their goals, up from 13% in 2012. Men, age 55 or older, making more than $100,000 per year are more than four times as likely to say they are on track with their retirement goals than the most at risk group, women under 45-years-old making $60,000 a year.

In general, women are less prepared to make contributions to retirement plans. About 37% of women do not have a handle on their cash flow and 46% say they are not comfortable with the amount of their non-mortgage debt. As a result, the median percentage of salary contributed by women is only 6%, compared to 8% for men.

Financial assessment and education can help resolve the problems, the study says. Study participants who completed Financial Wellness Assessment surveys, a proprietary planning tool developed by Financial Finesse, from 2011 to 2013, also reported changed financial management behaviors.

About 30% of this group of study participants are confident they are on track to meet their retirement goals, up from 17% before beginning a financial education program, and 47% are confident in their investment allocation in their retirement savings programs, up from 31% before financial education.

More than half (54%) now use a financial calculator to plan their retirement investments, up from 40% before an education program. The group also reported a wide range of improvements in money management behaviors, including:

• Managing cash flow
• Maintaining an emergency fund
• Paying bills on time
• Reducing credit card balances
• Contributing to a Roth or traditional Individual Retirement Account.

The author
Len Strazewski has been covering employee benefits issues for more than 30 years. He has an M.S. in Industrial Relations from Loyola University in Chicago.