Putting a Number on It Helps Tell the Story

November 2024

Numbers alone, without context, don’t mean a lot.  But when they help us understand something — and often they help us measure ephemeral concepts — they assume use and importance.  Consider, for instance, the Richter scale, the temperature and your weight.

Being able to quantify something, putting a number on it, helps us to understand our environment and events. The number 8 means nothing until you connect it to seismic activity, and then it can represent something cataclysmic. The number 70 can represent a perfect New England fall day if it appears on a thermometer.

“Financial Wellness” is, most professionals agree, another ephemeral concept — a state of (financial) being with as many different meanings as there are individuals. 

Yet when you think about it, the financial services industry is in business to help people achieve financial wellness … or their own version of it.

The LIMRA Financial Wellness Index (the Index) helps us put a number on it. 

The Index is based on a variety of measures, current and forward-looking, that are both measurable and reflective of personal situations. These include confidence in one’s financial situation, the ability to meet unexpected demands and the ability to plan and save for the future. At its highest level, the Index is calculated for consumers overall, but it can also be applied to a host of demographic factors, including working status. This helps inform the financial services industry, including service providers and financial advisors, with a better understanding of how consumers are acting and reacting in their environments — and what they may need to improve their wellness.

Starting With a Number

Over time, the Index can also be used to measure progress toward financial goals and overall wellness.

Using a zero-to-10 scale, with 10 representing total wellness — or absence of financial stress— the Index offers a benchmark by which to compare current and future-state financial wellness and explore differences in financial wellness based on demographic characteristics.

When first introduced in 2022, the overall financial wellness Index score for the entire study base, which was weighted to represent the general population, was 5.57, very slightly crossing the scale’s midpoint on the side of wellness (absence of financial stress).

By 2024, the Index score at the “all consumer” level dropped by 11 percent, to 4.95 (Figure 1). 

For nearly all demographics, scores have dropped since 2022.

• The average drop for all consumers is 11 percent. Divorced consumers and those with a two-year or equivalent college degree experienced the greatest drops.
• Two traditionally vulnerable demographics — lowest income and those with less than a high school or equivalent education — experienced slight, nominal increases in financial wellness index scores.
• Other, also more traditionally at-risk or vulnerable populations … women, LGBTQ+, younger, unemployed and black consumers … experienced slightly lower drops than their demographic counterparts.
• Higher incomes, which demonstrate higher levels of financial wellness overall, have experienced the greatest percentage point drops in financial wellness, when compared to 2022.
• The self-employed experienced the largest drop in financial wellness — 26 percent.
• Financial wellness continues to be markedly lower for consumers and workers who are younger, women, American Indian, Native Alaskan, Hawaiian or Pacific Islander or Black, and lower income.

Conclusion                                    

In an environment of rising inflation, volatile economic markets, changing workplace dynamics, political uncertainty and more, consumers and workers alike struggle with financial, emotional and physical issues and situations that can have tremendous impacts on their quality of life, their careers and work performance.

The almost universal drop in the LIMRA Financial Wellness Index from 2022 to 2024 highlights the need for financial wellness benefits, education and services to help people manage their financial lives and futures.

For many, these can be effectively delivered in the workplace, where workers see a natural connection to workplace programs and benefits and improving their financial wellness. Nearly 70 percent of workers agree that their employee benefits are an important part of their financial wellness, with 27 percent strongly agreeing. Two-thirds of workers feel that it is an employer’s responsibility to offer wellness programs to help them reduce their financial stress (up 5 percent from 2022). Further illustrating the importance of workplace wellness for both employers and workers, the study found that 75 percent of workers who participate in a financial wellness program (compared to just 52 percent who do not participate) report that their employer benefits help them to reduce their financial stress.

Purveyors of financial wellness programs, products and education — whether in the workplace or in a retail/advisory relationship — can help change the story these numbers tell. 

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