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Retirement Readiness
Retirement Insecurity Is Hurting More Than Just Savings
Last Updated: July 21, 2025
The Emotional, Physical, and Workplace Impacts of Financial Stress
In our previous article, Evidence Continues to Pile Up: Americans Aren’t On Track for Retirement, we highlighted new research showing that retirement readiness continues to slip further out of reach for many Americans. The 401(k) should be helping close that gap, yet far too few employees are financially prepared to retire.
The consequences of this growing insecurity extend beyond future financial shortfalls—they are impacting employees and organizations today. Financial insecurity, especially around retirement, isn’t a distant or abstract problem. It’s a real, present-day pressure affecting employee health, personal relationships, and workplace performance. For employers, these pressures manifest as reduced productivity, increased turnover, and weakened organizational culture.
In this article, we explore the well-documented, far-reaching effects of financial stress and how they affect millions of Americans and the organizations that depend on them.
– Employees delaying retirement
– Financial stress impacting retention and productivity
– Plans that are active—but not necessarily effective
The Employee Impacts
For many workers, money problems are a daily reality. The fear that retirement savings won’t be sufficient adds a persistent layer of stress that affects not only mental health but also relationships, physical well-being, and workplace engagement.
Mental Health
Financial stress is one of the most significant contributors to mental health challenges today. According to the American Psychological Association’s 2022 Stress in America survey, money consistently ranks as a significant source of chronic stress for Americans.¹ And this stress doesn’t simply pass—it builds over time.
1. 42% of U.S. adults say money negatively impacts their mental health.2
2. Those facing financial insecurity are 6 times more likely to experience panic attacks3; 83% report anxiety, and 56% report depression4.
3. A systematic review in PubMed Central found strong, positive correlations between financial stress and both depression and anxiety across multiple studies.5,6
4. Employees under financial stress often exhibit concentration difficulties, irritability, and fatigue, which impair their overall performance.7
Relationship Health
Financial stress rarely remains contained within individuals; it spills over into personal relationships. Ongoing tension related to bills, debt, and savings goals can erode trust and spark conflict. When financial insecurity becomes the norm, relationships are often the first place it shows up.
1. Money is cited as the #2 reason for divorce.8
2. Financial incompatibility is the “final straw” in nearly 41% of divorces.8
3. Stress linked to financial insecurity often results in emotional withdrawal, resentment, and communication breakdowns, compounding relationship difficulties.9
Physical Health
The toll financial stress takes on the body is well-documented and profound. If your financial wellness is low and you have high financial stress, you’re twice as likely to have poor overall health.10
1. Employees facing financial stress are 11 timesmore likely to experience sleepless nights.3
2. Chronic financial stress has been linked to heart disease, high blood pressure, and gastrointestinal issues.11
3. Over time, stress lowers the immune system’s defenses, leading to increased burnout and more frequent illness.12
It’s not just about “feeling stressed.” It’s about long-term health outcomes shaped by ongoing financial insecurity.
Career Health
Financial stress doesn’t clock out when employees clock in. It shows up as distraction, lower confidence, and reduced capacity to take on new challenges.
1. Workers under financial pressure are more likely to avoid high-stakes projects, feel less confident, and withdraw from advancement opportunities.13-16
2. The 2022 PwC Financial Wellness Survey found 76% of stressed employees say financial worries have had a negative impact on their productivity.17
3. Persistent stress results in lower focus, increased errors, and waning motivation.18
The long-term cost? Slower growth, missed promotions, and limited potential for both the employee and the employer.
The Employer Impacts
And these issues don’t stay at home. It walks into work with them, affecting how they focus, perform, collaborate, and stay engaged. Over time, the cost to employers adds up in lost productivity, rising turnover, and a weakening workplace culture.
Lost Productivity
When financial stress clouds focus, productivity suffers.
1. Financially insecure employees lose 29–39 productive days per year.3
2. They spend an average of 8 work hours each week stressing about personal finances.19
3. Some studies estimate the employer cost of this productivity loss at 13%–18% of total salary expense.3
4. The cost to employers is substantial, with the total annual impact of employee financial stress estimated to range from $183 billion to as high as $500 billion, depending on the study.20,21
These figures highlight a substantial, often under-recognized drain on organizational resources.
Absenteeism and Presenteeism
Financial stress impacts attendance and engagement, further eroding organizational effectiveness.
1. Employees dealing with financial pressure miss nearly twice as many days as their peers.22
2. Financially stressed employees are 7x more likely to report that stress affects their attendance.17
3. And when they do come to work, many are only partially present—presenteeism costs U.S. businesses billions more in diminished output and decision-making capacity.23
Turnover
Financial stress pushes people to look for stability elsewhere, which carries significant replacement costs.
1. Financially insecure employees are approximately 2x more likely to be seeking another job.3
2. Replacing those employees can cost employers 50%–200% of an employee’s salary, depending on the role.24
3. Leaders overwhelmingly see the link—78% say financial stress has contributed to higher turnover in their workforce.20
Disengagement and Culture
Stress pulls employees away from engagement, satisfaction, and innovation.
1. A MetLife survey found that employees who felt good about their financial health were happier (84% vs. 55%) and more engaged (78% vs. 53%).25
2. Financially stressed employees are also approximately twice as likely to be disengaged from their work.26
3. That disengagement affects collaboration, morale, and long-term growth across the organization.
It All Adds Up
When retirement goes off track, financial stress escalates, permeating every aspect of employees’ lives and workplaces. This cumulative effect imposes serious costs on individuals and employers alike.
This isn’t just a financial problem. It’s a people problem. A workplace problem. But it’s also a problem with a solution—because a well-managed 401(k) can and should be a powerful tool to help employees get back on track for retirement.
If this resonates, we invite you to join our live webinar, What’s Your Problem, 401(k)? We’ll unpack the root causes and share practical steps employers can take to drive real retirement readiness for their employees.
WHAT NOW?
This is the problem we’re focused on solving. The good news is that it can be solved!
If any of this resonates—if you’re nodding along or feeling the same frustrations—you’re not alone. And you’re not stuck.
Join us for our live webinar, ‘What’s Your Problem, 401(k)?’ We’ll unpack the root issues holding plans back in more detail and share practical, actionable steps employers can take to drive real retirement readiness for your employees
At Pension Consultants, Inc., we don’t just talk about the problem; we offer a proven approach that brings clarity, accountability, and the right metrics to 401(k) plan management. We work alongside fiduciary committees to set the right goal, measure what matters, and manage plans to truly help employees get on track for retirement.
If you’re ready to move beyond checking boxes and start helping your people retire with confidence, let’s get acquainted.
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Sources:
- 1. American Psychological Association. (2022, October). Stress in America™ 2022: Concerned for the future, beset by inflation. https://www.apa.org/news/press/releases/stress/2022/concerned-future-inflation
- 2. (2022, May 2). 42% of U.S. adults say money negatively impacts their mental health [PDF]. Bankrate. https://www.bankrate.com/f/102997/039023e894/20220502-financial-wellness-survey.pdf
- 3. Salary Finance Inc. (2020). The Employer’s Guide to Financial Wellness 2020: 2nd Annual Report. https://resources.salaryfinance.com/hubfs/Inside%20the%20Wallets%20of%20Working%20Americans%20-%20The%202nd%20Annual%20Salary%20Finance%20Report-2.pdf
- 4. Salary Finance Inc. (2022). The Employer’s Guide to Financial Wellness 2022: 4th Annual Report. https://resources.salaryfinance.com/hubfs/Content/US-B2B/Salary%20Finance%20-%20Inside%20the%20Wallets%20of%20Working%20Americans%20-%202022%20Report.pdf
- 5. Guan, N., Guariglia, A., Moore, P., Xu, F., & Al‑Janabi, H. (2022). Financial stress and depression in adults: A systematic review. PLOS ONE, 17(2), Article e0264041. https://doi.org/10.1371/journal.pone.0264041
- 6. Ryu, S. & Lu, F. (2022). The Relationship Between Financial Worries and Psychological Distress Among U.S. Adults. J Fam Econ Issue, 1;44(1):16–33. (PMC35125855) https://pmc.ncbi.nlm.nih.gov/articles/PMC8806009/
- 7. Enrich. (2023, March). The impact of financial stress on employee performance, workplace productivity & mental health. Enrich. Retrieved July 3, 2025, from https://enrich.org/the-impact-of-financial-stress-on-employee-performance-workplace-productivity-mental-health/
8. Jackson, M. (2025). 10 most common reasons for divorce. Marriage.com. Retrieved July 3, 2025, from https://www.marriage.com/advice/divorce/10-most-common-reasons-for-divorce/
9. Chae, C., (2025, March 19). Navigating Financial Stress with Your Partner. Abundance Therapy Center. https://www.abundancetherapycenter.com/blog/navigating-financial-stress-with-your-partner/
10. (n.d.). How can financial wellness affect your health? WebMD. Retrieved July 7, 2025, from https://www.webmd.com/mental-health/how-can-financial-wellness-affect-your-health
11. American Heart Association. (2020, February 4). Chronic stress can cause heart trouble. American Heart Association. https://www.heart.org/en/news/2020/02/04/chronic-stress-can-cause-heart-trouble
12. Maruvada, S. (2025, April 24). Stress and immunity. NC State Campus Health. https://healthypack.dasa.ncsu.edu/stress-and-immunity/
13. Sanchez-Gomez, M., Giorgi, G., Libera Finstad, G., Alessio, F., Ariza-Montes, A., Archangeli, G., Mucci, N. (2021, May 15). Economic stress at work: Its impact over absenteeism and innovation. International Journal of Environmental Research and Public Health, 18(4), Article 1833. https://pmc.ncbi.nlm.nih.gov/articles/PMC8156033/;
14. Barrilleaux, S. American Institute of Stress. (2025, February 26). Financial stress linked to lower job satisfaction, study finds. https://www.stress.org/news/financial-stress-linked-to-lower-job-satisfaction-study-finds/
15. Rosso, Vager F., Muñoz-Pascual, L., Galende, J. (2024, June 2). Do managers need to worry about employees’ financial stress? A review of two decades of research. Human Resource Management Review, Vol. 34(3), Article 101030. https://www.sciencedirect.com/science/article/abs/pii/S1053482224000202
16. SoFi at Work. (2024, February 6). The future of workplace financial well‑being: 2024 employer & employee perspectives. Business Wire. https://www2.sofiatwork.com/2024FutureofWorkplaceFinancialWellbeing
17. PricewaterhouseCoopers. (2022). Employee financial wellness survey 2022. PwC. Retrieved July 7, 2025, from https://www.pwc.com/us/en/services/consulting/business-transformation/library/assets/pwc-2022-employee-financial-wellness-survey-results.pdf
18. Sterling, C. (2024, August 7). How employee stress impacts productivity. Office of Professional Education, Central Connecticut State University. Retrieved July 7, 2025, from https://pe.ccsu.edu/how-employee-stress-impacts-productivity/
19. Zaki, A. (2024, February 28). 1 in 4 employees say financial stress lowers their productivity: report. CFO.com. Retrieved July 7, 2025, from https://www.cfo.com/news/1-in-4-employees-say-financial-stress-lowers-their-productivity-report/708740/
20. Mayer, K. (2024, June 7). Employees’ financial stress is costing employers billions. SHRM. Retrieved July 7, 2025, from https://www.shrm.org/topics-tools/news/benefits-compensation/employees–financial-stress-is-costing-employers-billions-
21. Reilly, C. (2020, September 9). Crisis: Worker Financial Stress Costs Employers Billions Of Dollars Annually. https://www.forbes.com/sites/colleenreilly/2020/09/09/why-financial-wellbeing-at-work-is-more-important-than-ever/
22. Vozza, S. (2018, October). What’s on your employees’ minds?: Financial stress and workplace performance. ADP SPARK. Retrieved July 7, 2025, from https://www.adp.com/spark/articles/2018/10/whats-on-your-employees-minds-financial-stress-and-workplace-performance.aspx
23. Dungan, R. (2025, June 4). Presenteeism costing US firms $150bn a year, Harvard Business Review finds. HR Retrieved July 7, 2025, from https://www.hrgrapevine.com/us/content/article/2025-06-04-presenteeism-costs-firms-billions-says-harvard-business-review-investigation
24. Payactiv. (2024, December 20). The cost of replacing an employee in business. Payactiv. https://www.payactiv.com/blog/cost-of-replacing-an-employee/
25. Harrison, J. (2024, May 16). Why financial wellness is important in the workplace. WebMD Health Services. https://www.webmdhealthservices.com/blog/why-financial-wellness-is-important-in-the-workplace/
26. Ezra, G. E. (2024, October 28). The long-term impact of financial stress on employee retention: A hidden crisis. Bridgeover. https://bridgeover.io/blog/long-term-impact-of-financial-stress-on-employee-retention/Pension Consultants, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser, located at 300 S. Campbell Ave., Springfield MO, 65806. For questions or more information contact us at 417.889.4918.
