Despite budgets for salary increases reaching a 22-year high in 2023, more employees than ever—nearly nine out of 10—are feeling stressed about their finances, with almost half saying they are “just getting by,” according to a new survey by SoFi at Work.

In a survey of workers conducted in late 2023, SoFi found that 86% of employees feel increasingly stressed about their finances—up more than 10% from the firm’s previous report from 2022—with 60% worried about inflation and the rising cost of goods.

In addition, the number of employees who said they are not stressed about money also decreased nearly 50% since SoFi’s last reporting period, a sign that wage increases are not catching up with other economic strains.

The new report, “The Future of Workplace Financial Well-Being: 2024 Employer & Employee Perspectives,” includes responses from 1,500 HR leaders and employees between the ages 18 and 70. The study was conducted from September 28 through October 13, 2023.

Across all ages, two financial issues topped the list of concerns for most employees: lack of cash reserve and saving for retirement.

Nearly two out of three employees said they feel unprepared to handle a major unexpected expense like a car repair or replacing a broken appliance, and nearly half of employees said they are stressed about not having enough money saved for retirement.

Having an emergency savings fund was a top priority for 47% of employees, a notable 20% increase from 2022, and 40% want to make progress paying off credit card debt, a priority which has risen 13% since SoFi’s last report. According to a separate report on household debt from the Federal Reserve Bank of New York, Americans now owe a collective $1.13 trillion on their credit cards.

Raiding Savings

The data also showed that employees are turning to retirement savings to meet near-term needs. According to SoFi, one in five employees reported having borrowed or withdrawn from retirement savings last year.

Michael Bourgeois, vice president and business lead at SoFi at Work, said in an emailed response that it is difficult to pinpoint the exact reason why many employees are taking early withdrawals from their retirement accounts.

“Many of these financial decisions and setbacks are so interdependent and woven together that it’s difficult to see exactly what is causing what, but oftentimes the issues will compound,” Bourgeois said. “Considering the rise in credit rates and the relatively low COLA adjustments employers have been awarding the last few years (among other difficulties, especially for cash-strapped employees), there are dozens of factors that eat away at financial well-being.” 

He said in some cases, a lack of emergency savings may force employees to withdraw from retirement accounts to cover unexpected expenses like medical bills and home repairs.

“We’re seeing that employee priorities are shifting toward short-term resiliency,” Bourgeois said.

He added that student loan debt can also get in the way of bolstering emergency funds and retirement savings.

“In fact, 78% of employees who are still paying down student loans say they can’t contribute as much to retirement as they’d like because of student loan debt,” Bourgeois said. “Tackling debt leaves less money for savings, and when short-term expenses hit, many employees have no choice but to borrow from the funds available to them, like 401(k)s.”

Help, Please

The research also showed areas in which plan sponsors can help mitigate the financial strains.

Retirement saving matching is now among the most enticing employee benefits, according to SoFi. Bourgeois suggested that there are a handful of low- or no-cost support options employers can implement quickly, such as sharing educational materials and resources to help employees understand and navigate their debt.

According to the survey, 70% of HR leaders said their company offers financial well-being benefits, but only 48% of employees say their employer does, indicating a need for more employee knowledge about programs already available.

The survey also pointed out a communication discrepancy, as 76% of HR leaders claimed to communicate about benefits at least quarterly or monthly, but only 67% of employees said they had received information about benefits in the last six months.

To improve communication, SoFi at Work suggested that employers should: ask employees what they need; listen to their responses; provide customizable programs that meet employees where they are; and offer easy access to services that employees can trust.

Bourgeois said talent retention is also a top pain point for companies this year, so it is “important to understand what benefits employees want and will turn the needle for employers.”

The report indicated some awareness of new policies intended to help employees manage their finances: 40% of HR leaders said they plan to start taking advantage of the optional provisions in the SECURE 2.0 Act of 2022, such as matching employee student loan repayments with retirement account contributions and providing an emergency savings sidecar account. Meanwhile, nine out of 10 employees said they want these benefits and would be more likely to stay with their employer long-term if they matched student loan repayments with retirement contributions.

Bourgeois also noted that one in three employees said their financial stress is impacting their ability to focus on their jobs, and nearly 25% said the stress reduces their productivity and confidence. The business lead emphasized that by implementing holistic financial well-being benefits and helping employees deal with the “root of their financial stress,” employers have an opportunity to improve overall wellness and productivity in the workplace.