Managing Stress at Work May Be the Key to Workers Saving More for Retirement
Managing stress at work is becoming increasingly important to employers. Financial wellness programs are quickly becoming the go-to-strategy for managing stress at work. These programs are designed to help reduce money-related stressors and increase workplace productivity by teaching workers valuable financial management skills such as budgeting, how to pay off debt, fundamental investing skills, how to save for retirement, and more. Now, some employers are taking the idea of financial support a step further by offering loan programs as an employee benefit.
Essentially, the idea is to help employees when they get into a financial bind. To reiterate, managing stress at work makes for happier, more productive employees — obviously, a good thing for employers. Americans under age 35 have, on average, a savings account balance of $1,580. Those 35 to 64 have savings of between $5,000 to $8,500. That doesn’t go very far when a transmission breaks or an unforeseen hefty medical bill arises.
Thus, more employers are starting to think outside the box when it comes to offering benefits that help reduce workers’ stress and assuage cash-flow concerns. Comcast, for example, recently instituted a loan program for its employees. According to the Texarkana Gazette, the loans of $1,000 to $2,000 will be available to most employees, don’t require a credit check, and are repaid through payroll deductions.
Granted, the interest rates on those loans is a whopping 24.9% — more expensive than most credit cards — but still cheaper than other types of debt available for individuals with little to no credit history. The Gazette gives an example of California payday loans, which come with astronomical annual interest rates — as much as 400%. Given that, workplace loan programs appear to be a more affordable option. In addition, they don’t cost employers much and maybe a good substitute for actual raises, which the Texarkana Gazette reports are still in short supply despite the current high employment rate.
The article also points out that it seems employers are beginning to recognize that employees’ ability to save for retirement is being hindered by the high cost of housing, student loan debt, and lack of basic budgeting skills. As such, workplace financial wellness continues to be a growing trend. Based on data from an Aon survey cited in the Gazette article, 14% of employers said they already have a strategy for helping employees improve their financial well-being, and 62% say they will have a strategy within the next three years. Additionally, more than 70% of the 150 multi-national companies Aon surveyed believe they have a responsibility to help employees save for retirement and pay for healthcare. Employer sentiment on helping workers cover day-to-day emergencies and manage debt was less enthusiastic, with just 15% believing they have a responsibility to do so.
Nonetheless, the rise of loan programs and student debt assistance in the workplace seems to indicate that employers are, indeed, listening to their employees’ concerns. Many workers who are saddled by debt and other financial concerns feel like they can’t “afford” to save for retirement until they can pay those off. So it’s possible that by providing loan programs as a benefit, employers can help workers in managing stress at work. Striking a balance between meeting their near-term cash-flow needs and making room in their budget to set aside some savings for retirement is not a panacea by any means, but it is a big first-step forward.
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