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Financial Wellness Key To Improving Retirement Outcomes

Financial Wellness

Financial Wellness Key To Improving Retirement Outcomes. It’s no secret Americans are stressed out about money, and that it’s having a negative impact on their workplace performance. What’s more, their financial worries are putting a notable crimp in their retirement savings efforts. And despite their stress, many American workers don’t believe they need to seek professional financial advice for their money woes.

These are some of the key findings of a recent survey from Charles Schwab, which studied the financial attitudes and behaviors of 1,000 American workers, half of whom actively save in a 401(k) (“savers”) and half of whom do not (“non-savers”). Both groups admitted that financial stress impacted their job performance.

However, the good news for employers is that the majority of workers in both groups (86% of savers) and (77% of non-savers) said they’d welcome a financial wellness program in their workplace. So if your organization offers a financial wellness program, or if you’re considering one, know that your employees do (or will) appreciate and benefit from it.

That said, the Schwab survey found that 40% of savers and 44% of non-savers did not believe their personal financial situation was worthy of professional financial advice. But if they got professional help, investment confidence would soar for both groups, according to the survey.

A full 76% of savers and 70% of non-savers said they would feel very/extremely confident if they received professional investment guidance, compared to 50% of savers and 47% of non-savers who said they felt the same level of confidence in making investment decisions on their own.

Whether employees are currently saving or not, they are relying on their workplace retirement plans as their primary source of income in their post-career years. A majority — 60% of savers and 53% of non-savers who contributed to a 401(k) at one time — said their 401(k) is their largest or only source of savings. Moreover, the trends are positive among savers: 66% have increased their contribution rates in the past two years, and 62% said they believe they’re saving enough to retire when they want to.

Interestingly, although investment fees can have a marked impact on retirement savings, both savers and non-savers seemed relatively unphased, saying that fees had more of an influence on their choice of credit card, ATM, airline or online shopping destination than on their 401(k) investment selection.

Not surprisingly, short-term financial stressors are the biggest obstacle to long-term savings for many Americans. Nearly 45% of non-savers say they have no money left over or are behind on bills at the end of the month, compared to 23% of savers. Non-savers’ financial worries fall into four primary categories: basic monthly bills (46%), credit card debt (42%), unforeseen expenses (i.e., home repairs), and medical bills (33%). Savers have similar concerns, but in smaller numbers: unexpected expenses (36%), monthly bills (31%), unwillingness to sacrifice luxuries (29%), and credit card debt (29%).

All of this data reveals two very important takeaways: 1. employees understand and appreciate the value of workplace retirement plans in helping them prepare for life after work, and 2. workplace financial wellness programs may be more important to improving retirement readiness and outcomes than many employers realize.

Indeed, such programs can make a big difference in helping employees learn to better manage their money and make smarter financial decisions, leading to reduced stress, higher productivity, and improved long-term savings behaviors, particularly when it comes to building a retirement nest egg. Of course, accountability is a critical part of financial wellness — employees can’t just “set it and forget it.” Having a financial coach to check in with regularly, or leveraging technology, such as an app that keeps them accountable to their goals, can help put employees on the right track to healthier finances and better futures.

Robyn Kurdek

Robyn Kurdek

Freelance writer with nearly 2 decades of financial industry experience, with niche expertise in the defined contribution (DC) industry. I also have defined benefit (DB) plan knowledge. I write all types of content for retirement plan participants, sponsors and advisors, including web copy, newsletters, white papers, fact sheets, blog posts, financial wellness articles, and more. "I speak DC."
Robyn Kurdek
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