A new survey claims concerns and stress about personal finances are distracting U.S. employees during working hours, suggesting an issue for advisors south of the border.
The Society for Human Resource Management reports that, although U.S. businesses have begun to recover from the Great Recession, many employees still face significant financial challenges and remain concerned about their ability to cover financial obligations.
"Business leaders should be troubled that many of our nation's workers continue to face financial hardships and related stress, especially during working hours," said Shawn Gilfedder, president and CEO McGraw-Hill Federal Credit Union, which sponsored the survey.
The 2014 SHRM survey Financial Wellness in the Workplace, uncovered the following alarming trends:
- Seven out of 10 managers indicate personal financial challenges have a large impact on their employees' performance.
- More than 40 per cent said an overall lack of funds to cover personal expenses is impacting employees in their companies.
- Almost 40 per cent of employees are facing more personal finance challenges now compared with the onset of the recession in 2007.
Especially worrying was this finding: Employees were more likely to request a loan from retirement savings or a hardship withdrawal from retirement savings during the past 12 months compared to previous years.
Tapping retirement savings to meet current cash flow problems is a newly emerging issue according to a recent Bloomberg report, which noted that premature withdrawals from retirement accounts have become ``America's new piggy bank`` in the wake of the recession in 2008.
The report noted that the Internal Revenue Service collected $5.7 billion in 2011 in early withdrawal penalties, suggesting Americans took out about $57 billion from retirement funds before they were supposed to.
In the 2000s, as the price of homes rose, Americans could refinance their mortgage and generate some cash. Since the housing bust, however, that avenue of financing daily life has closed.
Now desperate Americans are turning to their retirement savings. Which can`t be good. According to Bloomberg, "the early withdrawals indicate that the coming retirement crisis could be even more acute than expected."
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