Financial Wellness Helps Boost Household Savings

401k Plan FeesFinancial wellness helps Americans to increase their household savings.  Financial wellness has a positive impact on household savings rates, according to new research from Hearts & Wallets, an independent research and benchmarking firm that specializes in saving, investing, and financial advice.

The Hearts & Wallets research reflects U.S. households that adopt five key financial wellness behaviors are able to put more money aside than those households that don’t.  The report includes data from 5,993 U.S. households.  Hearts & Wallets defines these financial behaviors as “Peak Accumulator” behaviors. According to Hearts & Wallets, 67% of Peak Accumulators save 10%-plus of their income, more than double the national rate of 30% for U.S. households saving 10%-plus in 2022.

Additionally, Peak Accumulators had a national adoption rate of being “true” for the five following behaviors in 2022:

  • “My insurance needs are covered (life, home, car, health)” – 66%
  • “I have little or no credit card debt” – 59%
  • “I have some savings in case I lose my job” – 54%
  • “I generally spend less than I make” – 51%
  • “I have a retirement savings plan(s) and I contribute to it/them regularly” – 43%

It appears financial wellness programs are making forward progress in improving overall money health and well-being among U.S. households. Nationwide, 19% of U.S. households worked-on all 5 Peak Accumulator™ behaviors in 2022.  This was up 4 percentage points from 15% in 2011. “Retirement savings” is the most difficult behavior to adopt, according to Hearts & Wallets.

Over the past decade, Americans have made the most progress on “some savings” with 54% of households setting aside some money, up 11 percentage points from 43% in 2011.  Americans show progress in executing on three behaviors:

  • “retirement savings,” up 7 percentage points,
  • “insurance needs are covered,” up 6 percentage points, and
  • “spend less than I make,” up 5 percentage points from 2011.

Unfortunately, showing “little or no credit card debt” is basically flat from 2011.

Fortunately, the research reflected that workplace programs are being more widely recognized by participants.  Not only that, participants appear to be taking the information they’re provided in these programs to heart.  They are following through in their actions.  According to Hearts & Wallets, participant-reported financial wellness behaviors are improving steadily at Vanguard, Voya, Principal, T. Rowe Price, and Empower.  Voya has the highest proportion of workplace participants who work on all 5 Peak Accumulator behaviors, at 47%.

Hearts & Wallets found that nationally, U.S. households are saving more.  Over 1 in 3 households (37%) save $5,000-plus annually, 1 in 5 save $10,000-plus, and 8% save $20,000-plus.  Consumers are upping their average allocations to liquid accounts, including bank savings/certificates of deposits (CDs) and taxable brokerage.

The full report examines household saving, firm competitive data, a life insurance case study, and in-depth account allocations.  Also considered were the use of taxable brokerage accounts, employer-sponsored plans and emergency funds.

Financial stress still plagues many American households, but it appears financial wellness may finally be sticking for some of them after decades of trying.  Employers should continue to work to engage participants in financial wellness programs and monitor their effectiveness.  This can occur by periodically surveying employees to ensure that they are making the most of these programs.  It shows there is real-value in helping employees to get on track to reach their goals.  Employers who aren’t yet offering financial wellness programs may consider doing so if their budget allows.  Engaging the help of a knowledgeable financial advisor who can do the heavy lifting when it comes to implementing a financial wellness program will go a long way towards helping participants prepare for the future.


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