Financial wellness continues to be a hot topic, for its lack affects not only the personal lives of Americans and their employers’ bottom line as well. When employees are worried about paying bills, managing debt, or saving for emergencies, they don’t leave their worries at home; the stress follows them to work. The result? Lost productivity, high absenteeism that often translates into higher turnover, and a business cost that most employers don’t fully understand.

Productivity Costs of Financial Stress—And the Wellness Gap They Reveal

There are many definitions of financial wellness, but Drew Pratt, VP of investment advice at Rebalance, puts it well, “Financial wellness is the ability of people to lead a successful financial life.” Easier said than done, isn’t it?

Two related but distinct terms often get confused: financial literacy and financial wellness. Financial literacy involves learning and understanding concepts such as budgeting, investing, and saving. Financial wellness, on the other hand, involves action such as making a budget, starting an emergency fund, and paying down debt. Employees may know what they should do but still often feel overwhelmed or unsure about where to start. That’s where the gap occurs.

Financial stress is usually the culprit. One definition of financial stress is the anxiety and pressure individuals feel about their financial security and their ability to meet monetary obligations.

Much of this financial stress is linked to economic uncertainty. The U.S. economy has been volatile the past few years, with fluctuating interest rates, inflation, and credit card debt. According to the PwC 2023 Employee Financial Wellness Survey, 57% of employees say finances are their top cause of stress. The same study found that financial uncertainty affects key areas such as sleep (56%) and personal relationships (40%).

Poor financial wellness has become a national epidemic according to USI Consulting Group. Studies show that, for example, 33% of employees have less than $100 in their account while 37% have taken early withdrawals from their retirement funds.

A January 2025 article by Forbes reports what employers and employees know all too well—financial stress among workers has gotten worse over the past couple of years. These numbers tell the story:

• 37% of employees have taken early withdrawals from their retirement funds (Transamerica, 2023)

• 59% of Americans can’t cover a $1,000 emergency expense (Bankrate, 2025)

• $1.14 trillion in U.S. credit card debt (Federal Reserve, 2025)

• $104,215 average household debt in 2023 –an 11% increase since 2020

And despite headlines about inflation going down, Resume Now’s 2025 Wage Reality Report shows that 73% of employees can afford only basic living expenses; another 24% struggle to pay essentials, while 12% can’t cover them at all.

These financial stresses create a fragility that doesn’t stay hidden in workers’ personal lives. They seep into their work, affecting performance, absenteeism, focus, and morale. PwC’s survey found that almost half of employees spend time at work worrying about or handling personal financial issues. Other studies estimate they spend as much as three hours a week on money matters.

Older research from around 2020, cited by publications like Forbes and SHRM, reported that 80% of employers saw lower employee performance due to financial stress, with estimated productivity losses of almost $500 billion per year. These numbers may have shifted over time, but the stressors haven’t gone away—and neither has the damage to company bottom lines.

Programs Are Expanding—But The Gap Persists

Can help be on the way? Many companies recognize that financial stress affects their workforce—they’re just not always sure what to do about it.

According to Bank of America’s 2022 Workplace Benefits Report, 80% of employees say they’d be more likely to stay with an employer who supports their financial wellness. A PNC Bank survey found that 96% of employees believe financial wellness benefits improve morale and retention.

Yet employers have been slow to adopt these programs. A Transamerica survey shows that only 47% of employers are expected to offer financial wellness programs by the end of 2025. And among those that do, employee participation often lags.

Why the disconnect? Sometimes it’s the cost—who pays for it, the employer, employee, or both? Sometimes it’s the structure—will the program be automated, or a combination of digital and human support? Often, it’s a matter of visibility. If the programs aren’t well-communicated or easily accessible, employees won’t use them. It can also be a matter of privacy. Employees may like the idea of the program, but are reluctant to disclose personal information, fearful their employer will learn they’re having financial difficulties—or worse, access their personal financial information. So they don’t participate.

One place where progress is being made? Retirement plan providers.

401(k) providers are increasingly integrating financial wellness programs into their existing platforms. Some include features such budgeting tools, calculators, financial literacy modules, and even access to coaches. Others offer emergency savings opportunities, either alongside retirement savings or part of the retirement plan—helping with both long-term and short-term solutions.

Because these tools are delivered through systems that are both familiar and trusted—and safe from company prying eyes—employees are more likely to engage with them. They don’t have to find another site or remember another login. Financial wellness becomes part of employee benefits—where it belongs.

Closing the Gap Pays Dividends

As we’ve seen, financially stressed employees are less productive, more distracted, and more likely to change jobs. Financially healthy employees, by contrast, are more engaged at work, more loyal, and better able to focus on tasks.

That’s not just a feel-good insight—it’s a business one as well.

A financially healthy workforce leads to:

• Improved retention – fewer employees leave due to financial hardship or burnout

• Higher productivity – less time spent worrying = more time focused on work

• Lower healthcare costs – stress-related conditions often go down

• Better retirement readiness – reducing costly delays in workforce transitions

How costly is delayed retirement? According to Prudential research, it can cost employers up to $50,000 per year per employee in salary, benefits, and reduced productivity. Investing in financial wellness programs—especially those that with strong budgeting and saving features—can help employees retire on time, confident in their ability to manage their retirement income, and reduce the company’s financial burden significantly.

In short: closing the financial wellness gap delivers real ROI.

Final Thoughts

The financial wellness gap is real—and so are the consequences of ignoring it. The opportunities are also real. Companies don’t need to overhaul their entire benefits program to begin making an impact. They can start by recognizing there’s a disconnect, evaluating the programs they’re already offering, and finding ways to make financial wellness tools more accessible.

The financial wellness gap won’t close on its own.

The real question is whether your company is ready to help close the gap—and benefit from a financially healthier, more productive workforce in the process. And oh yes—you’ll feel good about it too!