Generational Financial Health Gap Widens as Millennials Struggle with Debt, Cash Issues, According to PwC Study

New York, April 8, 2014 – The gap in financial health between generations is growing as Generation Y employees – those currently between the ages of 21 to 32 – are struggling more with debt and cash management issues, while Baby Boomer and Generation X employees’ financial wellbeing has improved in the past twelve months, according to PwC US’s 2014 Employee Financial Wellness Survey. Gen Y or “Millennials” were the only generation to see an uptick in the percentage of employees who consistently carry balances on their credit cards, up 14 percentage points year-over-year to 51 percent. More Gen Y employees also reported difficulty meeting their household expenses on time each month – 41 percent, up 11 percentage points from last year; again, the only generation not to see an improvement.

“While last year our results showed that Gen X carried the heaviest financial burden as they were pulled between obligations to their parents, children and their own retirement, their financial health, along with that of Baby Boomers, appears to be recovering faster than Gen Y employees,” says Kent Allison, Partner and National Practice Leader of PwC’s Employee Financial Education practice. “Baby Boomers and Gen X have savings stored away and many still have some equity in their homes, so they’ve benefitted from the stock market rally and an increase in home values in most markets in the US. Millennials are more dependent on their incomes, and we’ve seen that the labor and wage markets haven’t improved as quickly as the equity markets. Disparity in financial health between the generations will likely continue to grow until we see an increase in wages that is greater than the increase in living expenses.”

Healthcare Cost Remain a Top Concern

Healthcare continues to be a significant concern with most employees (81 percent) saying they believe that healthcare costs will rise over the next several years, and less than half of all Baby Boomers (48 percent) confident they’ll be able to cover their medical expenses in retirement. Thirty-three percent of employees cited healthcare costs as one of their biggest concerns about retirement, but fewer employees cited the fear of losing healthcare coverage as a reason to delay retirement, down 5 percentage points this year from 29 percent last year.

There is a common perception among employees that the Affordable Care Act (ACA) will increase health insurance costs, as reported by more than half of employees (59 percent). While the vast majority of employees (85 percent) say they are familiar with the ACA, less than one in five (19 percent) have looked into using a health care program from a marketplace or exchange. Most employees (61 percent) say their employer has not provided any tools or resources to help them understand the effects of the ACA on their financial health and less than a third (30 percent) say their employer has provided educational pamphlets and materials. As more employers consider exchanges, it will likely require additional communication and education to alleviate confusion.

Retirement Confidence Up, but Employees Long for Security

Retirement confidence for employees overall rose 5 percentage points this year to 40 percent, with the largest jump in confidence coming from Baby Boomers (48 percent, up from 37 percent). While Baby Boomers are more confident, of those Baby Boomers planning to retire within the next five years, only half (51 percent) know how much income they will need in retirement. Despite a lack of planning around retirement income, employees do long for the security that guaranteed retirement income would provide. Forty-eight percent of employees say that they would be willing to sacrifice a portion of their future pay increases for guaranteed retirement income. Three-quarters (77 percent) of employees say they prefer a retirement plan with guaranteed fixed monthly payments for their life rather than a plan where they can take a lump sum at retirement and invest the funds themselves.

“It is likely that a long and sustained economic recovery alone will not reverse the growing retirement savings deficiency for most employees,” says Allison. “Planning and saving for long-term security is critical. Employers have an important role to play and need to continue their efforts to help employees become better savers and lead more financially healthy lives.”

Financial Stress Continues to Distract Employees

Given the state of their financial health, it shouldn’t be surprising that significantly more Millennial employees (60 percent) report financial anxiety than Baby Boomers (36 percent) and Gen X (53 percent). Although overall employee financial stress across generations dropped to its lowest level in three years to 48 percent from 61 percent in 2012, financial burdens continue to impact employee productivity.

Twenty-four percent of US employees admit that personal finances have been a distraction at work. Of those, 39 percent say they spend three hours or more at work each week thinking about or dealing with issues related to their personal finances. This is particularly true for Gen Y employees where 35 percent admit that personal financial issues have been a distraction at work, up 16 percentage points from 2013.

“Financial stress has a significant impact on both employees and employers. Increased stress can affect morale, health and ultimately an employer’s bottom line,” says Allison. “At PwC, we work with our clients to ensure that they can take a more proactive and holistic approach to improving financial wellness among their workforce– one that accounts for key generational differences.”

About PwC’s Employee Financial Wellness Survey and Financial Education practice

PwC’s Employee Financial Wellness Survey tracks the financial and retirement wellbeing of working US adults incorporating the views of more than 2,100 full-time employed adults.

Whether your employees are stressed over organizational shifts, market conditions, personal life events, or benefits changes, PwC's Employee Financial Education practice works with clients to design and deliver customized financial wellness programs tailored to employee needs and specific employer objectives. Our goal is to empower employees to make educated decisions to improve their financial wellbeing.

Experience the difference. Visit us online at, email us at or call us at 800-422-5579 to start the conversation.

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Colleen Krieger
Edelman for PwC’s Private Company Services
Tel: +1 (212) 277-3725