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June 03, 2021

Recession's toll on employees continues to mount

By Gordon Powers, Sympatico / MSN Finance

Employees are becoming increasingly concerned about the economy, and this concern is causing them to take a much more reactive approach to their finances, reports Financial Finesse, a California company that fields financial questions from hundreds of thousands of employees at more than 400 U.S. companies.

They found that only about 6% of the calls they received in the first quarter were about retirement planning. That’s down from about 14% last year, as more individuals than ever dialed in with questions about managing their immediate debts and budgets. Instead of planning for the long term, most people are narrowing their focus to managing their day-to-day finances, they report.

In addition, the calls are more serious with people considering more drastic steps such as bankruptcy, foreclosure, dramatically downsizing their life style, and taking on second jobs to make ends meet. 

What's worse is that the number of employees looking to tap their existing retirement assets by taking loans and heavily-taxed hardship withdrawals from their pension savings has more than doubled over the past year.

This makes sense, of course, as millions of jobs have been eliminated since the beginning of the year, while foreclosures in the States have surged to their highest levels in years. Add to this the fact that other studies suggest household income has dropped over the past year, on average, with the proportion of workers reporting household incomes under $50,000 rising from 30 to 38%. Household assets also have declined, with 75% of employees claiming they now have less than $100,000 to work with.  

It's a gloomy story, particularly when you consider that 86% of the people calling Financial Finesse's help lines confess to having no idea if they’re on track to retire and are really worried about their prospects. 

Even among those who have done some retirement planning, 72% have severe doubts about their asset allocation and risk tolerance, while 52% admit they don’t really have a clue when it comes to stocks, bonds or mutual funds.

Do things seem this bad where you work?



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...