Financial stress is costing businesses and the economy an estimated $66.8 billion due to employee distraction, lost motivation and productivity.

AMP’s 2022 Financial Wellness research shows the number of workers severely stressed about their finances is at record highs, having more than doubled since 2020. In total, financial stress is costing businesses and the economy an estimated $66.8 billion due to employee distraction, lost motivation and productivity.

Why we’re more stressed than ever

The research, conducted biennially since 2014, highlights two key drivers for rising stress levels. Firstly,  more employees than ever are dissatisfied with their current financial situation and are having difficulties meeting expenses. Secondly, anxiety levels have increased due to future concerns with cost-of-living pressures, including rising inflation and interest rates. At the same time they are becoming more pessimistic about pay increases and prospects.

Those most stressed

Financial stress has amplified across all income levels, but particularly for those in our community who were already experiencing relatively high levels of stress, including women, single parents and part-time workers. Those severely or moderately financially stressed include:

• 27 per cent of women, up from 19 per cent in 2020
• 25 per cent of single parents aged 30-44, up from 13 per cent
• 26 per cent of part-time workers, up from 18 per cent in 2020.

Lost workplace productivity

The research shows that 21 per cent of employees admit their productivity has fallen as a result of financial stress, almost double the 2020 figure. For those financially stressed, an estimated 12 hours a week at work are lost to ‘presenteeism’ – employees working at lower productivity due to the effects of the stress. Younger Australians – those under 30 – are the most distracted at work by their finances.

The silver lining

The research indicates that, despite the rising stress, most employees (73 per cent) continue to work to the best of their ability and take pride in their work and employer. The research also found that the Covid crisis has created impetus for many workers to reassess their finances and set goals, with the latter a proven contributor to financial wellness. Those workers considering setting goals has increased from 17 per cent to 34 per cent, while one in two employees indicate they are likely to seek professional financial advice in the next 12 months, albeit due an intention-action gap, only 19 per cent are likely to.

Stephen Owen, AMP’s General Manager Member Engagement said: “It’s no surprise we’re more financially stressed than ever.

“Following an emotionally unsettling two to three years with Covid, we’re now facing into rising interest rates, general cost of living pressures, a property downturn and jittery investment markets.

“What’s particularly concerning is the impact on women, single-parents and younger Australians, where stress levels have increased the most.

“But there are reasons to be optimistic – unemployment is at historic lows, our economy is in relatively robust shape, despite inflationary pressures, and new flexible ways of working are seemingly here to stay, easing the logistical pressure cooker for many families and reducing household expenditure.

“Importantly, the rising stress has also been a catalyst for many Australians to engage with their finances – more of us are recognising that simple steps such as setting financial goals, establishing a budget and accessing credible online educational resources can have a positive impact on financial peace of mind.

“These actions are the foundations for financial wellbeing, irrespective of income and age.

“Employers can also play an important role in helping their employees by providing access to information and experts, and working closely with a superannuation provider that is able to provide broad help and financial education, now and through retirement”.”

Top tips for individuals to improve financial wellbeing

• Find your bearings: Start by clarifying exactly where you are financially, including both your spending and income. Then take advantage of one of the many budget/tracking apps that provide a clear view of your spending patterns. This will allow you to stop worrying – and start managing.
• Set financial goals: Working towards meaningful goals makes being disciplined easier. Take the time to establish what you’re aiming for.
• Get help from the experts: There’s plenty of research showing that people who draw on expert advice, including from accountants, super funds, trusted websites and financial advisers, make better decisions and are less financially stressed. There’s lots of good help available, don’t be afraid to seek it out.

Top tips for employers to improve employee financial wellbeing

• Show the way: Education is key to financial wellness. Employees need both a realistic sense of their financial situation and a roadmap that shows them how to improve it. Employers can work with their super fund to provide financial education around optimising contributions and tax benefits – including through options like salary sacrifice, spouse contributions, non-concessional contributions and more.
• Promote helpful options: Employers should help ensure their employees are aware of initiatives and offers that could increase their financial wellbeing – staff discounts, salary packaging and payment options, financial health checks and counselling.  This support can be a valuable employee benefit.

About the research

Since 2014, AMP has been researching financial wellness, surveying the Australian working population to measure and provide a financial wellness reading on the population. How they “think” and “feel” when it comes to money. The intent is to help provide employers, government and financial services professionals with a deep understanding of the impact poor financial wellness has on individuals, productivity, society and the economy. Data from more than 2,000 respondents was collected between mid and late June 2022. Data was post-weighted based on ABS statistics: gender, age, location, working status, and industry.

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The new intra-fund advice offer comes as AMP’s Financial Wellness research shows that half of Australian workers have no plans in place to achieve their retirement goals. Most workers feel in the dark about how much income they will have or need in retirement and, according to the research, it’s women who are most anxious about their retirement.

The retirement heath check is a phone-based, simple, fast advice conversation available to members of AMP’s Super Directions Fund at no additional cost. It forms part of AMP’s Simple Super Advice suite of offers for members, which also covers super contributions, insurance and investments.

The service, delivered by a team of Retirement Specialists, will help members to consider their retirement options, how much superannuation is enough, how long money needs to last and general age pension entitlements. Members walk away feeling more informed and confident about whether they’re on track for a comfortable retirement.

AMP’s General Manager, Workplace Super Engagement, Stephen Owen, said: “Our Financial Wellness research shows that Australians feel underprepared and concerned about retirement – 50 per cent don’t know how much money they’ll have or need to achieve their desired living standard in retirement.

“Retirement is a critical period in our lives and the retirement income system is complex so it’s crucial people get access to information, guidance and good advice.

“The new offer will help our members take more control of their retirement, in particular, the critical and sometimes complex transition from our working lives into retirement.

“This is especially important for women, with our research showing they are more likely to have higher levels of financial stress, are less likely to have retirement goals, and are more concerned about retirement.

“Encouragingly, people recognise the importance of planning for retirement, albeit are unsure where to begin. COVID-19 has also acted as a wake up call, with more Australians setting goals and planning for their futures.

“The challenge is turning this positive intent into action, which is where the health check comes in, arming members with important information about the changes they can make now, even small ones, that can amount to big benefits later in life.

“We also know that feeling more in control of financial and retirement planning provides peace of mind and supports day-to-day wellbeing for Australians,” Mr Owen said.

Key concerns for Australians about retirement

• 44 per cent of Australians are concerned about not having enough money to retire;
• Two in five (39 per cent) are worried they will have to work longer than expected to have a comfortable retirement;
• One in three are concerned about a market crash or downturn impacting their super savings; and
• Three in four (76 per cent) recognise the importance of planning for a secure financial future, however the majority do not know what this encompasses when it comes to retirement.

Women and retirement

• 20 per cent of women have specific retirement goals, compared with 30 per cent of men;
• 54 per cent of women expect a modest or difficult retirement, compared with 46 per cent of men;
• 29 per cent of women are confident they’ll have enough money in retirement, compared with 48 per cent of men; and
• 39 per cent of women are worried about their ability to cope with unexpected expenses, compared with 30 per cent of men.

 Six tips to take control of your retirement planning

1. Build your knowledge – Utilise online resources and education programs provided by your employer or super provider to improve your understanding of key financial drivers.
2. Set goals – Connecting finances with goals helps us engage with our finances and having a plan to achieve these goals can significantly ease stress.
3. Create a budget that works for you – be clear about exactly how much money you need to live the lifestyle you want. And be realistic. Writing up a budget may take an afternoon out of your diary, but it will help you to more easily identify where there’s room to save.
4. Find and consolidate your super – According to the Australian Taxation Office (ATO) in June 2020, there was $13.9 billion in lost ATO-held super, so it pays to see if any of this is yours.
5. Commit to your investment strategy – Market fluctuations are not unusual, and over the past year, the coronavirus pandemic had a huge impact on millions of Australians’ retirement plans. While these fluctuations can be worrying, don’t be too quick to make dramatic changes to your investment strategy. Seek advice or talk to your super provider before you make changes. Just by selecting a different investment option, you could save tens of thousands more money for retirement.
6. Understand your entitlements – There are various benefits you may be able to access. Seniors over 60 have access to cheaper public transport, health care and prescription medications. Australians over  66 may also be eligible for the Age Pension, tax offsets and government loans.

About the research

AMP’s Financial Wellness research is conducted by The Behavioural Architects, a global insight, research and strategy consultancy, specialising in the application of behavioural science. Insights were collected from over 2,100 Australian employees and weighted to reflect Australia’s broader workforce, based on ABS data.

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