A deep dive into financial wellness

A gap between workers’ wages and the rising cost of living is creating financial stress among U.S. workers, Resume Now’s 2025 Wage Reality Report found. Seventy-three percent of workers struggle to afford anything but their basic living expenses, according to the report.

Of the more than 1,000 workers surveyed, 12% can’t always afford their basic living expenses, and 24% fight to cover essentials. 

One-third of workers say their salary hasn’t kept pace with inflation, and 55% don’t think their salary is as high as it should be.

Workers pointed to rising housing costs, increasing prices for essentials, salaries that don’t keep up with inflation and their inability to save for emergencies and the future as causes of their financial stress, the report found. 

“Rising costs and stagnant wages are making it harder to make ends meet. Workers may want to advocate for fair pay adjustments by staying informed about industry salary benchmarks or participating in discussions about cost-of-living raises,” Keith Spencer, a Resume Now career expert, said in the report. 

Financial stress among workers can affect employers because, coupled with salary dissatisfaction, it can affect morale and workplace dynamics, Spencer said.

Employers can help by offering better benefits, like healthcare and retirement matching; providing clear pathways to career growth and raises; and offering access to education and certificates that can improve workers’ earning potential, employees said. 

For their part, 29% of workers have moved into lower-cost areas or housing, and nearly 3 in 10 have assumed debt to cover their living expenses, the report found. 

In other cases, 44% of workers have looked for higher paying positions, and 17% have needed to take on a second job or part-time work to get by, according to Monster’s recent 2025 Work Watch Report.

Student loan debt significantly influences employee decisions to accept a job offer or stay with their current employer, according to a report from MissionSquare Research Institute.

A survey of 2,036 U.S. employees aged 18-49 revealed that 62% of private sector employees, and 56% public sector employees, consider their student loan debt before saying yes to a job offer. As for retention, only 34% of employees in the private sector with student loan debt, and 39% of employees in public sector, indicated they’re likely to stay with their employer, the report found.

On the other hand, employees with student loan debt “are more likely to pursue professional development goals, particularly those that lead to new skills, supervisor/managerial roles, additional education or certifications, and increased responsibility,” MissionSquare noted.

As of early last year, student loan debt totaled $1.6 trillion, with the average debt load among all borrowers nearly $38,000, Mary Moreland, Abbott’s HR executive vice president, pointed out in an op-ed for HR Dive.

Studies consistently document the toll student loan debt takes on employees. For example, more than 90% of borrowers between 18 and 39 reported that it affected their physical and mental well-being, according to a survey Abbott conducted with Morning Consult, Moreland said.

MissionSquare’s findings echoed this concern. Employees with student debt perceive the debt as a barrier to career advancement and are more likely to experience low morale, according to its report.

But the findings also revealed that employees with student loan debt may be more motivated to pursue professional development to enhance their income potential, the report said.

This suggests employers may benefit from subsidizing or absorbing the cost of helping with skills development, such as by adjusting compensation based on enhanced abilities, productivity and responsibilities, MissionSquare noted.

In a 2023 report, ADP Research Institute recommended employers offer financial education. Resources that help with budgeting, debt management and the basics on credit and interest may alleviate employee stress related to student loans, ADPRI’s research director wrote in a post about the report.

The Secure 2.0 Act, which aims to address shortfalls in employee retirement savings, offers another option — employer contributions to help with student loan debt.

Last year, the IRS detailed steps employers must take when contributing student loan payment matches to employee defined contribution plans for plan years beginning in 2025.

At Abbott, for example, 401(k) eligible employees who apply a percentage of their salary toward student loans receive an annual employer contribution to their 401(k) — regardless of whether they contribute themselves, Moreland explained.

Those who participate are 19% more likely to stay with Abbott, and some 54% young adults with student loans have said such a benefit would be a key factor when considering competing job offers, Moreland pointed out.

Given the uncertainty surrounding how President Donald Trump’s administration will handle student loan debt, employer support may become even more critical.

Trump has pushed to abolish the U.S. Department of Education, which oversees the government’s student loan portfolio through its Office of Federal Student Aid.

Supporters of dismantling the Education Department suggest moving the office to the Treasury Department, where it would continue its regular duties, including managing the repayment process, ABC News reported last week.

But detractors warn the system is “messy” and no transition has ever gone well, much less in a first-time attempt to move the entire portfolio, the report noted.

Additionally, a proposal by House Republicans, the College Cost Reduction Act (H.R. 6951), would limit access to federal student loans and increase student loan payments by almost $200, according to an analysis by The Institute for College Access and Success.

Most rencelty, the 8th U.S. Circuit Court of Appeals blocked the Education Department from administering former President Joe Biden’s student debt relief plan, Savings on a Valuable Education, designed to lower monthly payments for millions of borrowers and provide loan forgiveness for some, Reuters reported.

Sponsored content

By Ramsey SmartDollar

Employee benefits have come a long way since the first U.S. corporate pension plan in 1875. Since then, benefits have evolved to not only include health coverage and retirement savings plans but also PTO, flexible schedules and competitive wellness perks.

In fact, finding better benefits is the second-most common reason American workers leave their jobs—beat out only by the search for higher pay.1 But despite the improvement in benefits through the years, financial stress remains a top concern in the workplace, costing companies in productivity and retention.

So, what’s causing this gap?

Well, even though many organizations offer financial benefits, like competitive salaries, retirement plans and bonuses, they often overlook a fundamental issue: Employees don’t have the knowledge and tools to manage day-to-day finances—especially when it comes to debt.

The Real Cost of Employee Financial Stress

According to a recent study by Employee Benefit Research Institute, almost 3 in 4 employees in 2024 agreed that thinking about their financial future made them feel stressed, and 7 in 10 agreed that their lack of emergency savings made them nervous.1

The result? Almost half of these same employees reported that poor mental health and well-being negatively impacted their performance at work, with 45% saying that worrying about finances actively distracted them from their work.2

Employees also reported losing an average of over seven hours of productivity per week (almost a full workday) due to financial stress—costing U.S. employers around $183 billion per year. And why do 78% of leaders believe they had higher turnover last year? Yup. Employee stress.3

But where is all this money stress coming from in the first place? You guessed it—debt.

According to Ramsey Solutions’ State of Personal Finance (SoPF) Q4 2024, 77% of American households have some form of debt. The SoFP Q3 2024 report also found that 34% of Americans now carry more than $10,000 in consumer debt. And with the added effect of rising grocery costs and inflation, 61% of people don’t feel like they’re making any progress towards their goals, and over a third find it challenging to provide food for their household.

But in an era where 48% of Americans making $100,000 and 36% of Americans earning more than $200,000 are still living paycheck to paycheck, maybe income isn’t the problem—maybe people just don’t know how to manage their money.4

Traditional Benefits Aren’t Enough

As you can see, traditional benefits aren’t enough in 2025. Retirement plans, while important, do little to address the immediate financial challenges employees face daily. And even though bonuses and raises can provide temporary relief, again, they’re not a long-term solution to financial struggles. It’s dangerously easy for employees to take on even more debt after getting a raise! It’s an age-old cliché, but when it comes to debt elimination, knowledge is definitely power.

Here’s the thing: Your employees know there’s a problem. And they want your help—even if they’re too proud to say it directly. The Workplace Wellness Study reports that 73% of employees wished their employers offered more resources to help them manage finances, yet only 23% of employees actually get those benefits.

The Power of Financial Education Focused on Debt Elimination

When you provide employees with a financial education that emphasizes debt elimination, saving and budgeting, you’re cutting off financial stress at its core. A true financial wellness program isn’t about money hacks or shortcut solutions (like earned wage access)—it’s about encouraging behavior change that builds better long-term saving and spending habits.

When employees gain control over their finances, they experience lower levels of stress, improved mental well-being, and increased workplace productivity (more on that in a second). Programs like SmartDollar offer a structured step-by-step approach to help employees pay off debt faster and achieve lasting financial peace. As a result, about 26% of employees reported feeling less stressed after starting SmartDollar, according to SmartDollar’s Impact Study. The study also found that:

• Confidence in personal finances increased by 23% to 41% among users, while financial uncertainty dropped from 50% to 32%
• 57% of SmartDollar users successfully reduced their total debt since starting the program
• 74% of SmartDollar users now have the ability to cover a $1,000 emergency in cash, a key component of financial wellness

How Debt-Free Employees Impact Your Bottom Line

When employers invest in their employees, that investment comes back to them and multiplies. Employees who are free from financial stress take fewer sick days, stay focused, and contribute to a more positive workplace culture. These employees are often more loyal, sticking with companies that support their financial well-being. The numbers from the Impact Study and Workplace Wellness Study speak for themselves:

• 91% of employers report improved recruitment and hiring.
• 88% of employers confirm a visible reduction in workplace stress.
• 81% of employers have seen positive improvement overall since offering SmartDollar.
• 66% of employers report a positive ROI since offering SmartDollar.
• 63% of employers report an increase in employee benefit satisfaction.
• 81% of SmartDollar users were more likely to recommend their employer to a job-seeking friend.
• 65% of SmartDollar users rarely think about leaving their job.

Financial wellness programs aren’t just another workplace perk—they’re a strategic investment into the overall health of your business with real returns. When employees feel financially secure, they’re happier, more productive, and far less likely to jump ship for a higher salary—helping companies save $10,000 or more per retained employee.

Getting Started: Practical Steps for HR Leaders

Are you ready to help your employees? Start by reviewing your current benefits—are they truly helping with everyday money challenges? Focus on solutions that create real change, like debt elimination or smart saving habits, rather than just covering financial theory (because let’s be honest, that’s not what they need most).

A word of caution though—beware of pretender wellness programs. These so-called financial wellness programs often do a lot more harm than good, pushing high-interest credit cards and debt products that leave employees in even worse financial shape. Instead, partner with a program that has a proven track record of driving real, measurable impact—one that prioritizes true financial wellness and debt elimination over selling questionable financial products.

And don’t forget to spread the word! Regularly remind employees about the financial resources you make available to them so they can take full advantage, build a more secure future, and bring their best selves to work every day.

Four in 10 U.S. workers surveyed by the American Staffing Association said their debt — including mortgages, credit card debt, student loans and medical debt — was influencing their career decisions, according to the results.

Millennial workers were more likely than any other generation to say debt was affecting those choices.

Notably, nearly 3 in 4 workers surveyed said they have debt of some kind. “Increased levels of personal debt results in unhealthy levels of stress, damaged credit scores, limited mobility in the job market, reduced quality of life, and reduced prospects for the future for a growing number of individuals and their families,” Richard Wahlquist, CEO of ASA, said in a statement.

Financial stress can put incredible strain on workers’ productivity and health, various studies have shown.

According to a report from PNC Bank earlier this year, 3 in 5 U.S. workers said they lived paycheck to paycheck, and 78% of employers surveyed said their workers were financially stressed — a number that has grown since 2023.

On top of that, 43% of workers with employer-sponsored insurance carry some kind of medical debt, according to healthcare advocacy collective Goodroot. Younger workers were more likely to carry medical debt, researchers found, which aligns with ASA’s finding that millennials were most likely to carry some sort of debt.

Employers do have options to help workers — including a relatively new federal law that allows employers to make contributions to employees’ retirement plans based on qualified student loan payments. 

Abbott’s executive vice president of human resources explained in an HR Dive op-ed that her company’s program, Freedom 2 Save, helps workers focus on paying down debts: If a worker applies 2% or more of their salary to a student loan, they can receive “an annual employer contribution of 5% of their salary to their 401(k) — regardless of whether they contribute to their workplace retirement account themselves,” she wrote.

Only 21% of those in the middle class in the U.S. feel very confident they will be able to fully retire or maintain a comfortable lifestyle when they do so, according to the results of a survey conducted by nonprofit Transamerica Center for Retirement Studies and Transamerica Institute. The survey defined the middle class as people with an annual household income between $50,000 and $199,999.

Those surveyed said they faced competing financial priorities, including paying off debt (59%), saving for retirement (49%), developing an emergency savings (42%), saving for a major purchase or life event (31%) and covering basic living expenses (31%). 

Forty percent of those in the U.S. middle class said their greatest retirement fear is outliving their savings and investments. Of those surveyed, only 24% strongly agreed that they have a large enough nest egg.

“America’s middle class is navigating the turbulent post-pandemic economy and high rates of inflation. They are focused on their health and financial well-being, but many are at risk of not achieving a financially secure retirement,” Catherine Collinson, CEO and president of Transamerica Institute and TCRS, said in a statement. 

Nearly half of those in the middle class who haven’t yet retired expect to work longer than the typical retirement age, 52% plan to keep working after retirement, and 15% don’t plan to retire, according to the survey results. However, the actual median age of middle class retirees is 62, and half retired earlier than they expected, the report said. 

A recent Employee Benefit Research Institute report found that older workers now make up a greater share of the workforce, and the share of those who are “prime working age” (ages 25-64) has dropped since the mid-1990s. 

A separate EBRI report found that adults 65 and older made up 29.5% of the workforce in 2023, compared to an estimated 23% in 2000.

Workers are hamstrung from achieving life milestones by stagnant salaries and rising costs, according to the results of a survey by career website Zety. 

Of the 1,065 U.S. workers surveyed, half said they don’t feel able to start a family or grow theirs on their current salary, and 40% said they aren’t able to save for retirement. Meanwhile, 37% said they can’t afford to buy a home. 

More than 1 in 3 workers reported feeling hopeless, anxious or frustrated about the chances they can meet their life goals on their current salary, and more than 1 in 4 are looking for new job opportunities to reduce their financial stress, the survey found.

“This survey highlights a troubling trend where financial instability is crushing workers’ ambitions and emotional well-being,” said Jasmine Escalera, career expert at Zety. “When workers can’t see a path to major life milestones like homeownership or retirement, it’s not just about numbers on a paycheck — it’s about hope slipping away.”

To that end, 36% of workers said they felt less motivated to do more than expected at work, and 20% reported being more focused on increasing their income than trying to do a better job at work, per the survey. 

For nearly half, that means taking on extra responsibilities at work to boost pay, while for others it means looking for better-paying positions elsewhere. 

Some companies are turning to signing bonuses or other one-time bonuses over more permanent wage hikes as a flexible and cost-effective recruitment option, an Indeed economist said recently. 

Yet the gap between workers’ wages and the rising cost of living is causing real concern, as 73% of workers said they struggle to afford anything but their basic living expenses, and 12% said they can’t always afford their basic living expenses, a Resume Now report from January found.

Employees may see an immediate pay boost by job hopping, but doing so may also significantly decrease their retirement savings in the long term, according to a Vanguard report.

The investment firm found that the median job switcher sees a 10% increase in pay as well as a slight percentage point decline in their retirement savings rate after taking a new job. Vanguard analysts said this is due to the design of most employer-sponsored 401(k) plans, whose default savings rates differ from employer to employer and which do not always automatically enroll new employees.

Vanguard gave the example of an employee who earns $60,000 annually at the start of her career and switches jobs eight times in her lifetime — a total of nine jobs held overall, which Vanguard said is the typical amount for U.S. workers — finding that the employee’s potential lost retirement savings could be as much as $300,000.

“Put differently, [the employee] would have a 41% smaller retirement nest egg and be able to fund an estimated six fewer years of retirement spending than if she had remained with one employer,” Vanguard analysts said.

Those calculations assume the employee would have a stable career had she not changed jobs or, if she had changed jobs, that each employer she worked for would have a default retirement plan savings rate of 3%.

Why retirement woes are HR’s problem

Previously, the company said in a 2023 report that overall retirement saving participation increased between 2006 and 2021, with an especially large jump among Generation Z workers.

Despite that finding, however, retirement confidence remains low for U.S. workers generally. An August Transamerica survey found that only 21% of middle class Americans felt very confident that they would be able to retire fully or maintain a comfortable lifestyle in retirement. A separate poll by Economist Impact and Nuveen found that more than half of workers at mid- and large-sized U.S. companies lacked confidence in their ability to retire between ages 65 and 67.

Employee financial stress is an HR concern, given that 1 in 4 employees surveyed in a 2024 SoFi report said that stress reduces their productivity and confidence on the job. The same report found that 55% of HR leaders recognized the impact financial stress has on employee mental health, while 2 out of 5 said the same of employee productivity and focus.

Moreover, offering retirement assistance could aid retention goals. A 2022 study by Morgan Stanley at Work found that 94% of employees said retirement planning assistance from financial professionals is a priority when choosing where to work.

How employers can help

One solution for employers is to increase the default rate at which enrollees begin plan participation, Vanguard said. In the above example, the analysts found that increasing the rate from 3% to 6% would leave a savings gap of just $70,000. But not all participants may be able to afford a higher savings rate, meaning employers might have to offer “emergency expense withdrawals or other liquidity features” to prevent workers from choosing not to enroll.

Two additional ideas would require policy changes, Vanguard said, because “existing laws require automatic contribution rates to uniformly apply to all employees after giving them the required notice.”

The first involves setting default savings rates based on an enrolled employee’s age, as workers with longer tenure at a previous employer “tend to be older and experience a greater savings slowdown when switching jobs,” Vanguard said. The second would be to default to the rate that the employee had in their previous employer’s plan, if that rate is higher than the employer’s current default rate.

At an HR Dive virtual event, Lisa Gomez, assistant secretary of labor for employee benefits security at the U.S. Department of Labor, said that employers should consider designing flexible retirement plans that allow employees to address financial hardships when they arise. Gomez also pointed to employers’ role in educating employees on how to save and how to manage their retirement plans.