Economy taking toll on Canadians’ financial and mental health, employers’ bottom lines

  • Financial progress gained during the pandemic has declined in the past year with only 1 in 5 Canadian workers describing their financial situation as strong and 2 in 5 describing it as fair or poor
  • The report found that 1 in 3 employees surveyed think they’ll have to retire later than planned, a significant increase from the 1 in 4 who said they’d need to delay retirement last year
  • Sixty-two percent of employees are interested in receiving financial planning and mental health resources from their employer
  • Seventy-one percent of workers say their mental health has interfered with their ability to work in the past year
  • Employee stress can cost Canadian employers close to $2,000 a year per employee[1]

Toronto, ON (Apr. 18, 2023) – Manulife has announced the results of its third annual Manulife Retirement Survey: Stress, Finances, and Well-Being, a snapshot of how Canadian workers with an employer-sponsored retirement plan are feeling about their well-being, overall financial security, and retirement preparedness. It reveals the impact of the uncertain economy on Canadians and potential responses both employees and employers can consider in response to the macroeconomic environment.

“Just when the pandemic was finally giving way, Canadians were faced with a barrage of challenging economic concerns. Our survey shows not only how it negatively impacted their personal finances and mental health but also offered evidence of what might be done to counteract the uncertainty,” said Aimee DeCamillo, head of Global Retirement, Manulife Investment Management.

Financial stress grows

With the Bank of Canada raising interest rates seven times in 2022, inflation averaging 6.8% in 2022, and the potential for a recession dominating news coverage, it’s not surprising that 70% of respondents say they’re worried a great deal about the economy. Concerns about the impact of inflation on cost of living (61%), rising interest rates (46%), and economic conditions in general (42%) were the most frequently cited issues.

Nearly all respondents have taken note of rising costs in the past six months, with the vast majority reporting increased spending on groceries (98%), household basics (89%), gas (86%), and monthly bill payments (79%).

Canadians are doing their best to manage increasing expenses, with 77% of respondents making changes to their shopping habits and purchase plans. More specifically, about 2 in 3 are comparing costs and nearly half are postponing large purchases. Slightly more than a quarter of respondents reported cutting back to only buy essentials.

Personal finances increasingly strained as mental health decreases

Beyond concerns about economic conditions in general, more than half of respondents (53%) worry a great deal about one or more aspects of their personal finances. Most frequently cited are credit card debt (40%), not having enough emergency savings (30%), and not having enough retirement savings (29%).

These financial worries are coupled with a noteworthy decline in workers’ financial situations. Employees surveyed are now nearly twice as likely to describe their personal finances as fair or poor (40%) than they are to call them very good or excellent (21%). This year’s survey found a 10% increase in the number who considered their finances fair or poor and an 11% decrease in those who considered their financial situation to be excellent or very good.

As household budgets are strained by inflation, 2 in 5 respondents say it’s currently challenging for them to save money and 1 in 5 have dipped into their savings to be able to afford day-to-day necessities.

The challenging economic backdrop has had an impact on the mental well-being of 4 in 5 (79%) of respondents, with 24% saying it’s had a major impact.

Increased financial stress and decreased mental health affects the workplace

Employees’ mental health issues are showing up on the job, with 71% of employees surveyed reporting that their mental health has interfered with their ability to work in the past year. Four in 5 respondents worry about their finances while they’re working and nearly 1 in 3 say they worry often. Half of those who worry say they’d be more productive at work if they were less worried.

Employee stress can take a toll on companies’ bottom lines as well, with financial stress that can cost employers close to $2,000 ($1,786) per employee in lost productivity and absenteeism totaling up to $178,600 for small employers with 10 to 100 employees, up to $891,214 for medium-size businesses with 101 to 499 employees, and more than $893,000 for large employers with 500 employees or more.[2]

Employer-provided financial wellness programs and professional advice can make a difference

Employees themselves say that financial wellness programs reduce their financial stress (79%), make them more likely to stay with their employer (75%), more likely to recommend that someone consider working for the company (73%) and make them more productive (66%); however, only half say their employer offers a program and one in four (25%) are unsure if they have one.

Although only 1 in 5 Canadian employees surveyed describe their current financial situation as very good or excellent, those who have one-on-one support from a financial advisor are significantly more likely to say they have a very good or excellent financial situation. Additionally, those with an advisor report having an easier time saving money (36% vs. 28% without an advisor), more likely to be on track to retire (47% vs. 34% without an advisor), and more likely to feel good about their mental health (54% vs. 42% without an advisor).

“While our findings show Canadian workers’ financial and mental health is low, the good news is that we can see what helps,” said Brett Marchand, head of group retirement, Canada, Manulife. “Greater engagement—through financial wellness programs and professional financial advice—can help employees manage financial stress and improve mental health, while helping their employers with talent acquisition and retention, productivity, and the bottom line.”

Methodology

The 2022 stress, finances, and well-being survey was commissioned by Manulife and John Hancock Retirement and conducted by Edelman DXI. It was conducted with 1,551 Canadians using Angus Reid’s research panel. The survey was conducted in English and French from November 28, 2022, to December 8, 2022. Manulife is not affiliated with Edelman DXI and neither is responsible for the liabilities of the other.

Notes

1. This is a hypothetical illustration used for informational purposes only based on data from Manulife’s 2022 stress, finances, and well-being survey. This calculation is intended to provide general information about how much financial stress can cost a company every year. The calculation is based on missing 5.6 hours/year and 28.8 hours/year of lost productivity due to symptoms of financial stress with an assumed salary of $51.92/hour. Individual circumstances may vary: The example may not be reflective of your situation.

2. This is a hypothetical illustration used for informational purposes only, based on data from Manulife’s 2022 stress, finances, and well-being survey. This calculation is intended to provide general information about how much financial stress can cost a company every year. The calculation is based on missing 5.6 hours/year and 28.8 hours/year of lost productivity due to symptoms of financial stress with an assumed salary of $51.92/hour. Individual circumstances may vary: the example may not be reflective of your situation.

About Manulife Investment Management

Manulife Investment Management is the global brand for the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than a century of financial stewardship and the full resources of our parent company to serve individuals, institutions, and retirement plan members worldwide. Headquartered in Toronto, our leading capabilities in public and private markets are strengthened by an investment footprint that spans 19 geographies. We complement these capabilities by providing access to a network of unaffiliated asset managers from around the world. We’re committed to investing responsibly across our businesses. We develop innovative global frameworks for sustainable investing, collaboratively engage with companies in our securities portfolios, and maintain a high standard of stewardship where we own and operate assets, and we believe in supporting financial well-being through our workplace retirement plans. Today, plan sponsors around the world rely on our retirement plan administration and investment expertise to help their employees plan for, save for, and live a better retirement. Not all offerings are available in all jurisdictions. For additional information, please visit manulifeim.com.

About Manulife

Manulife Financial Corporation (TSX/NYSE/PSE: MFC, SEHK: 945) is a leading international financial services provider, helping people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we provide financial advice and insurance, operating as Manulife across Canada, Asia, and Europe, and primarily as John Hancock in the United States. Through Manulife Investment Management, the global brand for our Global Wealth and Asset Management segment, we serve individuals, institutions, and retirement plan members worldwide. At the end of 2022, we had more than 40,000 employees, over 116,000 agents, and thousands of distribution partners, serving over 34 million customers. We trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong. For more information, visit www.manulife.com.

Not all offerings are available in all jurisdictions. All figures in CAD unless otherwise stated.

SOURCE: Manulife Financial Corporation

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