As COVID-19 has heightened financial stress for many employees, employers feel responsible for helping improve their workers’ financial wellbeing. 2020 Workplace Benefits Report noted that 62 percent of employers feel “extremely” responsible for their employees’ financial wellness, up significantly from 13 percent in 2013. The findings are based on a survey of 808 employers that sponsor 401(k) plans, compared with the results of previous annual surveys of Bank of America.
At companies of all sizes, employees expect benefits programs that go beyond the basics. Employees want to see education and support that will help them not just save for retirement, but also help with everyday financial decisions. The report cited that workplace financial wellbeing has grown to address the full range of employee financial concerns. Workplace wellness programs have expanded to go beyond retirement planning and now address a wider range of financial topics, from healthcare to debt management, that all affect an employee’s sense of financial wellbeing. Eighty-one percent of respondents agreed that saving for retirement is the utmost important topic, followed by planning for healthcare costs, budgeting, saving for college, and debt.
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In addition to asking about employee’s feelings of financial wellness, the survey also asks employees how they feel they are doing when it comes to achieving their goals. Irrespective of what their goals are, less than four in 10 employees say that they have made significant progress towards those goals. Employees feel they have made the most progress towards saving for retirement, while short-term goals like debt management and purchasing a first home rank near the bottom of the list.
The top reason employees cite as to why they have not made more progress towards their goals is a purely economic one. They feel they don’t have any spare money left after their monthly expenses. This feeling is higher among women and younger employees, further underscoring the need for financial wellness programs to address both employees’ short- and long-term financial goals. When employees struggle to meet their short-term financial obligations, they are less likely to be able to focus on their long-term goals. Helping employees address topics like budgeting and saving, as well as retirement, might help create a sense of confidence and offer actionable skills that can help them allocate their income differently so they can achieve more of their goals.
More to a sense that employees don’t have any spare money left at the end of the month, lack of control over their debt might be preventing employees from making progress towards their financial goals. Debt maintenance costs eat into funds that could be used towards current expenses or long-term savings goals. And debts can also have an emotional price, eroding a sense of overall well-being. Nearly six in 10 employees say they do not have a high level of control over their debt, and nearly four in 10 say it affects their ability to achieve their financial goals.
The most impactful programs are those that are comprehensive and address the full range of employee needs. This requires a more responsive plan design as well as tools and access to advice that can help address each employee’s unique needs and provide them with personalized guidance on how to pursue their goals. And because feelings of wellness are increasingly multidimensional, wellness benefits should consider factors beyond financial and address more holistic definitions of wellness.
Likewise, for employers who are thinking about how they can offer financial wellness as part of their benefits plan, employees show a willingness to accept help on a wide range of topics from a third party if provided through their workplace. This means that employers can seek out a third-party provider that offers a wide range of financial tools and resources as an easy way to serve the needs of employees. However, if employers are considering how to structure their workplace financial wellness program, it is important to note that employees have a wide range of needs. A truly holistic program must offer solutions that can deliver the support employees are asking for, including:
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