It isn’t easy for most Americans to save for retirement, especially in recent years amid soaring inflation and persistent economic uncertainty. However, certain demographics are more challenged than others, including low-income workers and women. A pair of articles in Employee Benefit News and BenefitsPro recently explored these challenges, and offered potential solutions for employers to consider to help these groups save and build financial security for the future.
Employee Benefit News spotlighted an innovative idea from the father of the 401(k), Ted Benna, called the “Wheat Grains Incentive Plan.” This plan would cater specifically to low-income workers, early career employees, and hourly wage earners, offering a monthly incentive called a “wheat grain.” At the end of the month, the wheat grains would be invested in a money market account and grow tax-deferred, according to Benna’s vision. He got the idea from his childhood growing up on a farm, where planting a seed meant growth and more seeds over time.
With the Wheat Grains plan, employers could decide on the incentive amount–a flat rate or a percentage of employee compensation. Benna envisions balances growing to $500 or thousands of dollars over time. If employees accrued enough of a balance, they could roll their savings over to a 401(k) or IRA. According to Benna, a “‘wheat grains plan is a more modest way [than the 401(k)] for employers to help those on the lower end who could use some help.’”
BenefitPro examined the plight of women when it comes to saving for retirement and other financial goals. Some key barriers include the gender wage gap–women earn 82 cents for every dollar a man makes–and other financial stressors such as balancing career and family obligations. Many women (nearly 6 in 10 according to one recent survey) are living paycheck to paycheck, and have skipped doctor’s visits, necessary medications, mental healthcare, healthy food, and safe housing within the last six months due to cost.
Women are also juggling households, careers, and caregiving duties, and are more likely to reduce their hours or take a break from their careers to care for children or a family member. That time away from work often means a reduced income and less ability to save. Women are also living longer but saving less for retirement, and due to all of these factors, they have less capacity to handle unexpected expenses and legal costs, such as divorce and child custody matters.
Employers should consider providing financial wellness resources to help women cope with these barriers to financial stability. Access to financial coaching, on-demand webinars, and one-on-one advice from financial and retirement planning professionals can offer women education and guidance to help them meet the needs of others while looking out for themselves and their own futures.
