With limited budgets and an aging workforce, employers are copying the move from pensions or defined benefit plans to 401(k) or defined contribution for healthcare costs shifting costs and choice to employees. Not only are most employees unable to afford to pay more for benefits, they are ill-equipped to know who much to allocate to the various benefit options.
At a TPSU program held at Bentley University, the CFO of a small Boston lumber company describes the struggle his employees, especially younger ones with a new family, have balancing their benefits budget as healthcare costs continue to rise. Sometimes they put off saving for retirement thinking they can catch up later which can be a disaster. Other than high deferral rates, the biggest impact on retirement income is saving early.
The CFO describes how he tries to coach his employees on how to manage their benefits budget advising them that they should not neglect retirement savings. He realizes that more of the responsibility is shifting to his employees who are mostly ill-equipped to make the optimal decisions and he is struggling for ways to help.
Technology can play an important role as described by VP Tina Wilson at MassMutual which recently announced a tool that helps employees create the right benefit budget based on their financial position. Really fascinating and groundbreaking technology in the ever changing world of benefits as healthcare and retirement continue to converge. A world way workers are relying on their companies not just to manage benefits like healthcare but their entire financial needs. Changing world.
