Student debt is not only affecting millennials who are stressed about their finances and distracted by money issues when they are at work. Outstanding student loans are also affecting baby boomers who may be helping their kids to pay down balances owing instead of saving enough money to fund their own retirement.

A new study conducted by PricewaterhouseCoopers reveals that for the fifth year in a row, employees say their top two financial concerns are not having enough emergency savings for unexpected expenses (55%) and not being able to retire when they want to (37%).

However, millennials – who in 2015 surpassed Gen X to become the largest share of the U.S. workforce – tend to be in worse shape than their older counterparts. Nearly half of the full-time employed millennials surveyed find it difficult to meet their household expenses. Forty-two percent of millennial employees have student loans and 79% reported that their student loans have a moderate or significant impact on their other financial goals.

In addition, more than one in four of all employees (37% of millennials) report that personal finance issues have been a distraction at work (up from 20% last year) and 46% of those who are distracted by their finances at work say that they spend three hours or more a week thinking about or dealing with personal finance issues on the job.

The 2016 survey digs a little deeper into the student debt issue than previous reports, says Kent Allison, PwC’s national financial wellness practice leader Kent Allison. “We stripped out that audience vs. everyone else to determine the impact of student debt on millennials,” he says.

Millennials with student loans disclosed they are consistently stressed about their finances (81% of millennials vs. 46% of all employees), carry credit card balances (72% of millennials vs. 46% of all employees) and use credit cards to pay for monthly necessities because they are unable to afford them otherwise (41% of millennials vs. 27% of all employees).

“Millennials are not necessarily making wise choices. Other PwC research shows that as a result of their cash flow challenges, they are heavy users of alternative financial services like payday loans,” Allison says.

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"Running out of money is the baby boomers’ biggest concern about retirement, followed by health issues and healthcare costs."

And millennial student debt is also having a surprising effect on their parents, with 80% of baby boomers saying that student loans are having a significant or moderate impact on their ability to achieve other financial goals.

“There are people who are paying off student debt for their kids at the expense of saving for their own retirement,” says Allison. “We’d probably advise them to get their retirement in order first and then if they have enough, go back and help out their kids.”

In fact, employees surveyed disclosed that running out of money is the baby boomers’ biggest concern about retirement, followed by health issues and healthcare costs. Yet the majority of employees are not taking advantage of contributing to their health savings accounts and only 18% plan to use these funds for future healthcare costs in retirement.

Also, of the 61% of baby boomers who plan to retire within the next five years, less than half of them know how much they will need at retirement. Moreover, excluding the equity in their homes, only 50% of baby boomers have accumulated as much as $100,000 in savings.

In addition, 26% of baby boomers have already withdrawn money held in their retirement plans to pay for expenses other than retirement and 36% think it’s likely they’ll need to use money held in retirement plans for expenses other than retirement. Forty-eight percent of this group believe they will have to push their planned retirement date into the future because the will not have saved enough money to stop working.

“Furthermore, when you look at aging employee, the percent that are now supporting parents or in-laws has risen from 16% to 22%. I also saw a statistic a few years ago that retirees are the fastest growing population declaring bankruptcy,” he says.

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"Going forward, employers will no longer be able to simply issue a total rewards statement that says ‘here are the benefits we provide and how much we pay.’"

Allison acknowledges that many employers offer a rich array of benefit plans to facilitate employee financial wellness, but he suggests that, overall, employees do not use these plans in the most effective way.

“Matching benefit needs to the needs of particular employee demographics in a more targeted and proactive fashion will help employees use their benefits more frequently and appropriately, he says. “I think going forward, employers will no longer be able to simply issue a total rewards statement that says ‘here are the benefits we provide and how much we pay.’ It’s really about delivering to individuals the information, education and guidance around a particular benefit that matches their particular need.”

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