Millennials facing bigger debt and financial wellness woes

Despite the economy showing signs of some ongoing, overall improvement, America’s newest generation of full-time employees is beginning to experience some of the same financial struggles as older workers – and more on-the-job worry, as a result.

PwC U.S.’s 2014 Employee Financial Wellness Survey indicates that things are indeed tough for not only the Gen Y/millennial crowd – burdened with credit card balances they are challenged to pay off – but also for the older Gen X population and the burgeoning, ready-to-retire baby boomer generation.

The survey, however, suggests those millennial employees are feeling the pinch more strongly than other workers, and notes that ongoing financial stress can be a tremendous drain on worker productivity and performance – and will be until remuneration begins to match the rapidly increasing cost of living.

Some 39% of Gen Y employees surveyed indicated they consistently carry balances on their credit cards and often find it difficult to make even the minimum monthly payments on time, the only generational group to find themselves in a worse spot than last year. Boomers and Gen X workers, on the other hand, say they have been making strides in changing their frivolous spending patterns of the past and concentrating on paying bills and saving. Some 60% of millennials report experiencing an ongoing sense of financial anxiety.

On the whole, 24% of American employees say that their personal finances are causing a distraction at work, with 39% saying they spend three hours or more each week thinking about or trying to handle those financial issues.

Kent Allison, partner and national practice leader with PwC’s Employee Financial Education practice, says that ongoing stress can be a major challenge for employees, especially as older workers are now gradually moving in better financial directions.

“Baby boomers and Gen X have savings stored away and many still have some equity in their homes, so they’ve benefited from the stock market rally and an increase in home values in most markets in the U.S.,” he notes. “Millennials are more dependent on their incomes, and we’ve seen that the labor and wage markets haven’t improved as quickly as the equity 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.”

Across the board, employees also continue to be concerned about the steady rise in health care costs, with 59% of all employees indicating that they believe health insurance costs will rise as a result of the Affordable Care Act.

And while overall retirement confidence was up to 40% for all employees, the details are still fuzzy for those on-the-cusp-of-retirement boomers, with nearly half who are ready to retire in the next five years still uncertain about how much income they will actually need in retirement.

“It is likely that a long and sustained economic recovery alone will not reverse the growing retirement savings deficiency for most employees,” adds 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.”