By - August 29, 2019

4 Reasons to Focus on Employee Financial Wellness for a Healthy Retirement

4 Reasons to Focus on Employee Financial Wellness for a Healthy Retirement

From making 401(k) contributions to helping employees open their HSAs, employers play an important role in offering support for employee financial wellness during retirement. 

But here’s what every benefits professional should know. Research reveals many Americans haven’t followed best practices for financial wellness during retirement. 

In this article, we’re looking at research that reveals how many individuals don’t stick to common-sense financial principles. Such as planning sufficiently for the future or not touching 401(k) funds until retirement. 

Some individuals think Social Security can carry them through their golden years (just ask the Nationwide Retirement Institute).  

It’s important that company decision-makers understand the behaviors and mindset of the American retirement landscape. However, we also recommend combining these findings with internal research on your employee population. 

In turn, you’ll have insights to build a thoughtful program that helps employees improve their future financial health. Encouraging engagement in these programs and providing additional education builds employee confidence in their financial future and demonstrates your focus on their total well being.

Here are four reasons you should focus on the retirement aspect of employee financial wellness.

1.  More than 40% of Americans “Will Retire Broke” (Source

That’s right. 

GoBankingRates explains they released three surveys in 2018 which asked participants, “By your best estimate, how much money do you have saved for retirement?”  

Their research revealed 13.7% of respondents didn’t have a penny saved. And while 28.6% of respondents had some retirement savings, these were below $10,000. That makes for a total of 42.3%. 

How can you educate workers with little to no retirement savings? 

Start by ensuring they are aware of any employer-sponsored funds available—such as contributions to a 401(k) or HSA. For an employee struggling to save for retirement, every dollar of additional funds can help. 

Then, help your employees understand how to take advantage of these contributions. For this goal, you might use a retirement calculator (such as this one by Bankrate) to help employees see the impact that matching funds can make. Or incorporate benefits decision support software that shows the effect of HSA tax savings on medical costs and the growth of HSA funds for retirement. (Something Tango Decision Assist™ provides)

2.  Over 1 in 4 Americans Have Spent from a Retirement Piggy Bank (Source and Source

Reporting on MetLife’s research, Quartz reveals —from Baby Boomers to Generation Z—over 25% of American employees admit to spending 401(k) funds.  

A GoBankingRates survey confirms this statistic. According to their research, 44% of Americans answered in the affirmative to “Have you tapped into your retirement savings early?” 

Both publications shed light on the motivations behind spending from the retirement piggy bank. 

And a common motivation both articles mention is debt. 

This underscores an important consideration for your employee financial wellness program: Poor financial habits can harm your employees’ retirement savings. 

To help workers safeguard their 401(k)s, consider how your organization can support good budgeting and spending habits. 

Here are a few ideas to get you started: 

  • Create a webinar or a guide on creating a well-balanced budget.  
  • Host a lunch-and-learn on the pitfalls of credit card debt.  
  • Provide debt-reducing tips in your monthly newsletter.

3.  25% of Soon-to-Retire Americans Think Social Security Is Sufficient for the Future (Source)

According to a recent report, 25% of survey participants labeled as “Future Retirees” had some degree of agreement with the following statement:   

“Social Security on its own should be enough to help me live comfortably in retirement.” 

Barring the question of whether Social Security is sustainable, this number is concerning. Nationwide writes the average Social Security payout (for those already in retirement) is $1,408 per month. 

Living on $1,408 a month would place those living on Social Security only $4,836 above $12,060. This is the U.S. Department of Health & Human Services’s poverty guideline for a single person (excluding those living in Hawaii and Alaska).

In light of this stat, how can you support employee financial wellness when it comes to retirement? 

We recommend sharing these important numbers with your employees. 

Whether you communicate through email, host a workshop, or hold a webinar, make every effort to ensure your workers understand what they can expect from Social Security. 

The news may be unpleasant. 

But to support employee financial wellness, you’ll need to remove any myths your workers might have about Social Security. 

Be sure to educate your employees on other investment options. 

Don’t simply discourage them from depending on Social Security. Help them understand they have other financial vehicles for retirement—such as a 401(k), IRAs, HSA, and more. 

4.  Many Employees Don’t Take Advantage of Available Retirement Programs (Source

According to the Washington Post, many Americans miss out on retirement help from employers.  

The news giant reports “[while] nearly 80 percent of Americans work for an employer that offers retirement programs — whether a 401(k), 403(b) or something else — only 32 percent of workers sign up for such accounts.” 

Here’s the takeaway for employee financial wellness… 

Just because your organization offers retirement benefits doesn’t mean your employees will take advantage of them. 

If you’re a benefits professional, we recommend practical tips for addressing this challenge:  

  • Make sure your employees understand what’s available. Don’t assume your employees are fully informed of your company’s retirement offerings. Busy schedules, deleted emails, and missed benefits meetings are a reality. In your educational campaigns, communicate about retirement benefits…and then communicate again. 
  • Remove any obstacles. Your employees might be intimidated by concepts such as vested funds, contribution limits, or other unfamiliar terms. Try surveying your employees, and check for knowledge gaps or negative emotions that might hinder workers from leveraging retirement benefits. Then, use this data to inform your communications. (For tips on benefits communications, check out our 10 hacks.) 
  • Keep retirement top of mind. Mention retirement regularly throughout your educational campaigns. It’s easy for your employees to become focused on short-term financial needs. Bringing retirement savings to your employees’ attention can support a long-term perspective and encourage enrollment. 
  • Reach out to your broker. You don’t have to educate your employees on your own. Your broker is a great resource and will have educational materials to help. Plus, they might stop by for an in-person training.

Access Our Employee Financial Wellness Guide  

You might have some employees who need to increase their retirement contributions—while you may have others who need to stop using 401(k) funds to patch over poor spending habits. 

No matter what situations your employees face, creating a financially robust tomorrow starts with practicing healthy financial habits today

There’s an important connection between personal finances and retirement savings. After all, it’s difficult to fund a retirement if savings are slim in the monthly budget.  

If you’re ready to strengthen employee financial wellness, be sure to explore our four-step guide. This free resource is designed to be shared with your employees. In this guide, we explain three basic principles of personal finances and we provide some guidance for retirement.  

Download our guide Achieving Financial Wellness: Four Steps for Improving Your Personal Finances and 401(k) Savings

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