Findings from the “2014 Employee Financial Wellness Survey” suggest Millennial workers and younger members of Generation Y—identified in the study as those ages 21 to 32—are struggling more with debt and cash management issues, while Baby Boomer and Generation X employees’ financial wellness has improved in the past 12 months.

Younger Gen Y workers and Millennials were the only groups to see an uptick in the percentage of employees who consistently carry balances on their credit cards, up 14% year-over-year to 51%. More Gen Y employees also reported difficulty meeting their household expenses on time each month (41%), up 11% from last year. All older generations saw credit card debt and cash flow issues decline during the preceding year.

“While last year our results showed that Gen X carried the heaviest financial burden as they were pulled between obligations to their parents, children and their own retirement, their financial health, along with that of Baby Boomers, appears to be recovering faster than Gen Y employees,” says Kent Allison, partner and national practice leader of PwC’s employee financial education practice. “Baby Boomers and Gen X have savings stored away and many still have some equity in their homes, so they’ve benefitted from the stock market rally and an increase in home values in most markets in the U.S.”

The survey suggests Millennials, on the other hand, are more dependent on their incomes, so they are negatively impacted by stagnant wages and muted job markets.

“Disparity in financial health between the generations will likely continue to grow until we see an increase in wages that is greater than the increase in living expenses,” Allison explains.

Healthcare Costs Remain a Top Concern

Healthcare continues to be a significant concern, with most employees (81%) saying they believe that healthcare costs will rise over the next several years, and less than half of all Baby Boomers (48%) feeling confident they will be able to cover their medical expenses in retirement. Thirty-three percent of employees cited healthcare costs as one of their biggest concerns about retirement, but fewer employees cited the fear of losing healthcare coverage as a reason to delay retirement, down 5% this year from 29% last year.

The PwC survey suggests there is a common perception among employees that the Patient Protection and Affordable Care Act (or “ACA”) will increase health insurance costs, as reported by more than half of employees (59%). While the vast majority of employees (85%) say they are familiar with the ACA, less than one in five (19%) have looked into using a health care program from a marketplace or exchange.

A majority of employees (61%) say their employer has not provided any tools or resources to help them understand the effects of the ACA on their financial health, and less than a third (30%) say their employer has provided educational pamphlets and materials. As more employers consider exchanges, it will likely require additional communication and education to alleviate confusion, PwC says.

Retirement Confidence Up, but Employees Long for Security

Retirement confidence for all U.S. employees rose 5% this year to 40%, with the largest jump in confidence coming from Baby Boomers (48% feeling confident, up from 37% in 2013). While Baby Boomers are more confident, of those Baby Boomers planning to retire within the next five years, only half (51%) say they know how much income they will need in retirement.

Despite a lack of planning around retirement income, employees do long for the security that guaranteed retirement income would provide, PwC says. Forty-eight percent of employees say that they would be willing to sacrifice a portion of their future pay increases for guaranteed retirement income. Three-quarters (77%) of employees say they prefer a retirement plan with guaranteed fixed monthly payments for life, rather than a plan where they can take a lump sum at retirement and invest the funds themselves.

“It is likely that a long and sustained economic recovery alone will not reverse the growing retirement savings deficiency for most employees,” says Allison. “Planning and saving for long-term security is critical. Employers have an important role to play and need to continue their efforts to help employees become better savers and lead more financially healthy lives.”

Financial Stress Continues to Distract Employees

Given the state of their financial health, PwC researchers say it shouldn’t be surprising that significantly more Millennial employees (60%) report financial anxiety than Baby Boomers (36%) and Gen X (53%). 

The high level of financial distress is not just harming employees, PwC says. In fact, 24% percent of U.S. employees admit that personal finances have been a distraction at work and have resulted in lost productivity. Of those, 39% say they spend three hours or more at work each week thinking about or dealing with issues related to their personal finances. This is particularly true for Gen Y employee populations, where 35% admit that personal financial issues have been a distraction at work, up 16% from 2013.

“Financial stress has a significant impact on both employees and employers. Increased stress can affect morale, health and ultimately an employer’s bottom line,” says Allison. He urges plan sponsors and advisers to work with clients to ensure a more proactive and holistic approach to improving financial wellness among their workforce—one that accounts for key generational differences.

The complete survey results are available here.