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Is Financial Wellness a Must-Have Employee Benefit?

April 13, 2021
Employee stress is growing.
A new survey by John Hancock shows the prevalence of stress has doubled since the start of the COVID-19 pandemic. Currently, two-thirds of Americans feel financial stress, with 27 percent feeling “high levels” of financial stress.
Because of the pandemic, Americans now:
– Use money from their emergency savings account to meet monthly expenses (28 percent)
– Have increased credit card balances to meet monthly expenses (19 percent)
– Feel that their financial situation is fair or poor (35 percent)
When asked what could help, three-quarters of those surveyed stated that an employer-sponsored financial wellness program would positively affect their stress levels.
As an employer, should you consider adding financial wellness? Here are five reasons why financial wellness is a must-have benefit.
#1: Employees Use Financial Wellness When Offered
A recent Employee Financial Wellness Survey2 found that when employees have access to financial wellness, they use it. Of those surveyed, seventy-one percent used the benefit for:
– Retirement preparation (47 percent)
– Spending control (29 percent)
– Paying off debt (29 percent)
– Saving (29 percent)
– Asset allocation management (29 percent)
– Managing healthcare expenses (18 percent)
#2: Stressed Employees Are Not Good for the Bottom Line
With this growth in financial stress, there is no doubt that some of your employees are feeling the pinch. Unfortunately, this financial stress comes to the workplace, costing companies millions of dollars each year.
– Half of financially-stressed employees – and even 10 percent of those without financial stress – are distracted by finances while at work
– One in ten employees miss work due to financial worries
– Fifty percent of stress workers – and one-third of non-stressed workers – spend 3+ hours each week dealing with personal financial issues
– Two out of five stressed employees feel their health suffers due to financial stress
– 35 percent of employees are not currently saving for retirement
By reducing financial stress, employers can reduce absenteeism, presenteeism, and even on-the-job accidents while increasing 401(k) participation and on-time retirement.
#3: Financial Wellness Benefits Reduces Employee Turnover
Hiring and training employees are more than just a hassle – they are costly. A CAP study found that the cost to replace an employee is between 16 and 213 percent of the annual salary, depending on the employee’s wage and role:
– 16 percent for job earners making less than $30,000 per year
– 20 percent for job earners between $30,000 and $50,000 per year
– Up to 213 percent for high-salary executive positions
The PWC survey found that 78 percent of financially-stressed employees would be more attracted to another company that cared about their financial well-being. And when a company cares about an employee’s financial well-being, nearly half feel more loyal to that company.
#4: Financial Wellness Increases On-Time Retirements
Delayed retirement is a growing trend with financial consequences for the employer. Current data shows that 20 percent of employees over the age of 65 are still working4 and that 25 percent plan to work until they are at least 70.
The Tenth Fidelity Plan Sponsor Attitudes Study6 found that each employee beyond the traditional retirement age cost companies thousands of dollars a year:
– Increased healthcare costs – Those 65+ employees cost twice as much in healthcare as those 45 years old
– Decreased productivity – One in four employers find employees 65 years old and older to be less productive
– The cost per employee for a one year delay is $50,000 and is higher each additional year
Offering financial wellness can encourage employees to participate in the company 401(k) and give them the needed information and skills to make financial decisions to allow for on-time retirement.
#5: Financial Wellness Offers a Strong Return on Investment
Financial wellness programs that cover everything from budgeting and debt reduction to goal-setting and crisis management provide a strong return on investment (ROI) to the companies that offer them.
Enrich data shows that employees who participate in the financial wellness program experience positive financial behavior changes:
– 32 percent feel they are on track with their financial goals
– 28 percent pay off their credit card balance each month
– 27 percent created an emergency fund with three to six months of savings
– 15 percent contributed to their retirement plan
– 10 percent contributed enough to the 401(k) to get the employer match
In addition, financial wellness program users had a 23 percent decrease in financial stress over 12 months. This led to a decrease in absenteeism, presenteeism, HR admin costs, payroll taxes, healthcare premiums, workplace accidents, and employee turnover.
When added to the benefit of increased productivity, 401(k) participation, and on-time retirement, offering a digital financial wellness solution like Enrich can provide an ROI of 1500 percent or more.
Original Source: https://www.enrich.org/blog/is-financial-wellness-a-must-have-employee-benefit

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