Members of Generation X are having the most difficulty meeting their household expenses and dealing with other financial obligations, according to a new study by PricewaterhouseCoopers.

Generation X, defined as those born in the early 1960s to the early 1980s struggle the most when it comes to juggling competing financial priorities related to their homes, children and parents, compared to Baby Boomer and members of Generation Y. PwC US's 2013 Employee Financial Wellness Survey found that more than one-third (36 percent) of Gen X employees think it's likely they will need to dip into their retirement savings to pay for nonretirement expenses, a percentage significantly higher than for both Baby Boomers and Gen Y, also known as "Millennials.”

“What you see in the survey is that while there’s general incremental improvement in the debt management and cash management area, the generation that’s struggling the most is Generation X,” Kent Allison, partner and national practice leader of PwC's Employee Financial Education practice, told Accounting Today on Tuesday. “Why? Because they’re the ones who are the most over-extended and have the most issues. They’re taking care of their parents. They’ve got the heavier mortgage. They’ve got kids. They’re trying to pay for the education expenses. All those things are hitting them front and center. So retirement isn’t necessarily the top of mind for them. They’re dealing with day-to-day cash flow issues.”

Thirty percent of Gen X employees admit having already withdrawn money held in their retirement plans for expenses other than retirement. Gen X is also the most likely to find it difficult to meet household expenses each month, at 49 percent of survey respondents, compared to 31 percent of Baby Boomers and 30 percent of Gen Y.

Allison noted that PwC is seeing considerable “leakage” of up to 30 to 40 percent out of 401(k) retirement plans as employees are forced to borrow or withdraw funds, even as companies step up efforts to enroll more employees in them through tactics such as auto-enrollment and auto-escalation.

“The leakage from retirement plans reemphasizes that employees are facing immediate financial issues that compete with their focus on long-term savings for retirement,”¬¬¬ Allison said in a statement. “The impact of this conflict can be seen beyond employees' saving accounts. It becomes a key concern for employers that may see older, less healthy, less productive and more expensive employees working longer, impacting the bottom line and reducing the younger generations' opportunities for advancement.”

Lingering financial challenges continue to weigh down retirement confidence, PwC found. Significantly less than half (35 percent) of employees express confidence they will be able to retire when they desire, reflected in the finding that employees ages 45-54 possessed the lowest retirement confidence over the last three years.

Retirement Confidence by Age, Year over Year




Age 21 to 34




Age 35 to 44




Age 45 to 54




Age 55 to 64




Age 65+




While overall employee financial stress across generations decreased to 52 percent this year from 61 percent in 2012, financial stress continues to impact employee productivity. Twenty-three percent admit that personal finances have been a distraction at work. Of those, 19 percent say they spend five hours or more at work each week thinking about or dealing with issues related to their personal finances.

Employees' Biggest Concerns about Retirement*

            Running out of money


            Health care costs


            Not being able to maintain my standard of living


            Health issues


            Not being able to meet my monthly expenses


            I don't know what to do with my free time


            Not leaving any assets upon my death for my family, charity, etc


            Meeting education expenses for child/children


            Managing my investments in retirement




            Other expenses for children (e.g. wedding expenses)


* Respondents could choose up to two answers

Health care costs rank among the top of employees' retirement concerns, with 38 percent citing it as a concern. The fear of losing health care coverage drives an increasing number of people to delay retirement: 29 percent this year, up from 21 percent in 2012. More than half of the employees (53 percent) with health insurance said they are covered by a high- or mid-deductible health care plan, a reflection of the rise of consumer-directed health plans. While employees are concerned about health care costs, only 35 percent of those covered by a high or mid-deductible plan contribute to a health savings account and of those, only 12 percent indicate that they plan to use the funds as a means to meet future medical expenses in retirement.

Notably, the majority of those closest to retirement age are planning ahead: of the Baby Boomers planning to retire within the next five years before the age of 65, two out of every three employees have a plan for covering their healthcare expenses before becoming eligible for Medicare. Forty-three percent of Baby Boomers are confident they will be able to cover their medical expenses in retirement.

"As life expectancies extend, these concerns will only increase over time," said Allison. The burden of saving for retirement has shifted to the employee with the rise of defined contribution plans. So it's important for them to understand the benefits of options such as HSAs that allow them to meet current and future healthcare costs. The under-utilization of HSAs is an education issue that we encourage employers to address in their financial wellness programs." 

Cash flow issues continue to top employees' financial concerns, with anxieties about insufficient emergency savings for unexpected expenses (49 percent), delayed retirement (45 percent), and not being able to meet monthly expenses (22 percent) among the top concerns. In addition, almost half (49 percent) of Gen X  respondents find it difficult to meet their household expenses on time each month, as compared to Baby Boomers (31 percent) and Millennials (30 percent).

“Despite key economic indicators showing signs of improvement, a more sustained recovery is likely required before a significant positive impact occurs for employee financial wellness,” said Allison. "People often expect immediate improvements when the market climbs; however, employees' financial situations don't turn on a dime. With employees continuing to experience effects of the economic downturn, employers have an opportunity to drive change to employees' financial behaviors. Recognizing this, more and more companies are implementing holistic and proactive financial wellness programs that help their employees deal with the stresses of competing financial priorities without sacrificing their future, ultimately leading to a more productive and healthy workforce.”

He noted that Gen Y and Baby Boomers are improving the most with their financial wellness, but Gen Y is concerned about student debt.

In addition to the Employee Financial Wellness Survey that PwC conducts for business clients about their employees, PwC also leads financial literacy training sessions as part of its Earn Your Future service. The discussions often lead to double-digit changes in employee actions, according to Allison. “People are driving without a roadmap,” he noted. Increased financial wellness for employees can also help their employers by reducing health risks and productivity reduction of employees who worry about their financial situation.

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