Five-figure credit card and student loan debts … meager savings … burdensome medical bills … lack of financial knowledge … an inability to make ends meet. America’s workers are plagued by a host of financial problems, many of which accompany them to work.
Four in 10 middle-income workers – those with household incomes of between $35,000 and $150,000 – say they worry about money at work at least once a week, according to the MassMutual Middle America Financial Security Study . Half of those who earn less than $45,000 say the same.
It’s a problem that can have ramifications on the job. After all, do you really want a forklift driver who is distracted by credit card debt moving tons of inventory around a warehouse? How about a 20-something computer programmer feeling insecure about student loans as he works on IT security projects?
Those and scores of similar situations across the country are prompting more companies to introduce financial wellness programs to help employees solve their most pressing money problems. Shorter-term financial needs can prevent many people from saving for retirement and securing their longer-term future. It’s one reason why MassMutual’s study found that 63 percent of workers said they are behind when it comes to preparing for retirement.
A well-designed and implemented financial wellness program can help address many of the financial issues that MassMutual’s research found are top of mind for workers: debt (22 percent), lack of income (18 percent), bills and the cost of living (14 percent), healthcare and medical costs (11 percent) and lack of savings (8 percent).
Among those who admit to difficulty in managing their monthly finances, 53 percent point to high levels of debt as the culprit. Meanwhile, one in four say they have less than $1,000 saved for emergencies and 51 percent have less than $5,000.
Where to start? What does it take to help employees improve their financial lives and at what cost? Do you have to restate quarterly earnings projections or close a plant?
Fear not. Financial wellness starts not with a big investment or infrastructure but rather with education and tools, much of which is available through retirement plan and benefits providers. But financial wellness is also about guidance and solutions, which are available from the most advanced retirement and insurance providers. The employee benefits marketplace is witnessing a financial wellness arms race with employers and their employees being the winners.
The best financial wellness programs start with well-honed tools that help workers better understand their financial situation and then leverage data to help them prioritize their financial and benefits needs based on their personal financial and family situation. Users receive a “to do list” of simple, actionable steps to improve their overall financial wellness that can include more immediate needs and shorter-term goals (like budgeting, paying down credit card debt, managing student loans and building emergency savings) as well as getting on track to achieving longer-term financial goals (like funding children’s college costs, saving for retirement and planning for future healthcare costs). The most-effective tools help employees gain unique insight into what financial steps make the most sense for them and why, translating the findings into an actionable game plan.
But like most things in life, an employee’s financial life is not static. A tool needs to keep up with those changes, rejiggering to-do lists to reflect changing priorities as families grow, careers progress, life happens.
That means financial tools need to be complemented by a wide range of different solutions, products, services and capabilities to meet different financial needs, not only today but tomorrow. Many of those benefits are available on a voluntary basis, which means they are offered at no cost to employers.
Increasingly, employers are offering solutions to help employees better manage and reduce their debt, accumulate savings for financial emergencies, better budget their monthly expenses and income, cover emergency, critical and longer-term medical expenses, plan for children’s college educations and other financial needs. Assistance is available from financial advisors, benefits advisors and benefits providers to offer education, guidance and solutions to help employees grapple with their most-pressing financial problems.
The ability for employers to offer employees a wider palette of benefits on a voluntary basis or employee-paid basis provides additional resources for employees to protect their finances. Employees can select coverage to protect their finances against critical illnesses, medical emergencies, disabilities occurring outside of work, untimely deaths and other financial problems not covered by traditional healthcare coverage.
The combination of the right tools, financial education and an expanded benefits platform enables employees to customize benefits packages to meet their individual needs, family situation and budget. Over time, the goal is to help employees address shorter-term financial problems, build up their financial resources and focus on longer-term goals such as saving for retirement.
Ultimately, helping employees improve their overall financial wellness may just help lighten their load as they head to work, carrying their lunch instead of financial problems.
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