One way for companies to combat their employees’ lack of retirement readiness is to throw cash at their 401(k) plans, but that’s a lot easier said than done. A solution that has longer term and multi-faceted, positive outcomes is a financial wellness program.
Financial wellness, which is rising in popularity, is defined as:
When it comes to financial wellness, employer and employee goals are aligned. An employer aims to be paternalistic, decrease costs, obtain ROI, and have a dynamic workforce. Employees want to be financially well and have the ability to retire when they’re ready to retire.
The building blocks of a successful financial wellness program are like a pyramid, where financial knowledge is the foundation. Education is a huge piece of financial wellness because it’s not a topic that’s taught in school. Employees understand the importance of eliminating debt, and use the knowledge they gain to create personal budgets. Education is also a key tenet of the upper tiers of the pyramid.
When it comes to financial wellness, employer and employee goals are aligned.
Financially “unwell” employees lead to financially stressed employees. The number of people that are affected by financial stress is staggering. PricewaterhouseCooper’s (PwC’s) 2017 Employee Financial Wellness Survey, shows:
Financially “unwell” employees lead to financially stressed employees.
Financial stress is not only debilitating for both employees and employers. The financially quantifiable aspects of human capital affected by financial stress include:
The graphic to the right shows health issues that can arise from financial stress:
Employers have looked at financial wellness programs as the right thing to do, and are now able to quantify the positive benefits of implementing a financial wellness program.