Financial wellness matters because it has a lasting impact on employers and their employees. When American employees are living paycheck to paycheck it is easy to see how financial wellness matters. Covid-19 and the resulting economic fallout were a wakeup call for most Americans. Although they’d been told the importance of having an emergency fund for years, many didn’t truly understand the nature of those dire warnings. That is until 2020. During 2020, job losses and reduced hours forced workers to take a hard look at their personal finances. At that time all workers learned why and exactly how financial wellness matters.
The silver lining is that employers are now more focused than ever on implementing effective financial wellness programs. Employees now look to take control of their own financial wellness matters. Employees are now ready to take control according to a recent Employee Benefit News article. Offering a retirement plan is a good start, but that’s only the beginning, the article’s author, Matthew Eickman, opined. This was echoed in the article’s attention-grabbing headline, “retirement plans aren’t enough to sustain employees’ financial wellness.”
Many workers think retirement is a long way off. This, is always a guess for most of America’s employees. So saving 5%, 10%, 15% of their salary in a workplace retirement plan isn’t going to get them to where they need to be for retirement. It may help them sleep well at night; however such small savings practices will not likely solve their current financial situation long-term. According to Mr. Eickman, “That’s why short-, medium-, and long-term thinking are so important. Financial wellness programs can play a key role in providing this education for employees.”
Financial wellness matters and corresponding programs are evolving in the wake of the pandemic. As such, it’s critical that financial wellness programs be comprehensive and holistic in nature. They cannot be modular and disjointed. Such as how traditional 401(k) education programs have been. According to Mr. Eickman, “A legitimate financial wellness program is more likely to be a comprehensive curriculum, where employees certainly learn how the company retirement plan works, but also learn more about their overall financial picture.”
Mr. Eickman also made the case for an emphasis on budgeting. Budgeting helps employees get a better understanding of their finances. Knowing how to budget and manage finances helps people to accomplish all goals. This is appropriate whether saving for retirement, buying a home, or putting a child through college. And Mr. Eickman encourages employers to not to forget about family protection. Build education programs around short- and long-term needs. This can include disability coverage, along with helping employees assess their need for life insurance.
For older employees, Social Security education is critical and could include information about eligibility and how much they can potentially rely on benefits for their retirement. Altogether, a holistic financial wellness program helps employees understand their total financial picture, not just the amount in their 401(k) or 403(b) account.
According to Mr. Eickman, financial wellness is here to stay, especially in the wake of the pandemic. The employers’ commitment to offering these programs and encouraging employee engagement is only likely to increase. When employees aren’t financially healthy, it adversely affects the company’s bottom line. Therefore, employers should double down on financial wellness matters to help foster future financial stability for their employees and their organizations.
