by admin | Jul 28, 2017 | Employee Benefits, Financial Planning, Retirement
Over the past few years, we’ve seen tremendous growth in Financial Wellness Programs. Actually, as indicated in a recent report by Aon Hewitt, 77% of mid- to large-size companies will provide at least one financial wellness service in 2017; with 52% of employers providing services in more than 3 financial categories. So what are the advantages of these programs and how can the current workforce make the most out of them?
Program Advantages
- They educate employees on financial management. It’s no doubt, poor income management and cash-flow decisions increase financial stress. This stress has a direct impact on an employee’s physical, mental and emotional state—all which can lead to productivity issues, increased absenteeism, and rising healthcare costs. Financial wellness tools in the workplace can not only support employees in various areas of their finances by expanding income capacity, but can create long-lasting changes in their financial habits as well.
- They give a foothold to the employer. As more employers are recognizing the effect financial stress has on their employees in the workplace, they’re jumping on board with these programs. As people are extending the length of their careers, benefits like these are an attractive feature to the workforce and new job seekers alike. In fact, according to a recent survey by TIAA, respondents were more likely to consider employment with companies who provide free financial advice as part of their benefit package.
Program Credentials
While financial wellness benefits may differ among companies, one thing is certain—there are key factors employers should consider when establishing a successful program. They should:
- Give sound, unbiased advice. Financial wellness benefits should be free to the employee—no strings attached. Employees should not be solicited by financial institutions or financial companies that only want to seek a profit for services. Employers should research companies when shopping these programs to determine the right fit for their culture.
- Encompass all facets. A successful program should cover all aspects of financial planning, and target all demographics. These programs should run the gamut, providing resources for those with serious debt issues to those who seek advanced estate planning and asset protection. Services should include both short-term to long-term options that fit with the company’s size and culture. Popular programs implement a variety of tools. Employers should integrate these tools with other benefits to make it as seamless as possible for their employees to use.
- Detail financial wellness as a process, not an event. Strengthening financial prosperity is a process. When determining the right fit for your company, continued coaching and support is a must. This may require evaluating the program and services offered every year. Employees need to know that while they have the initial benefit of making a one-time change, additional tools are at their disposal to shift their financial mindset; strengthening their financial habits and behaviors down the road.
Employees must understand the value Financial Wellness Programs can provide to them as well. If your company offers these benefits, keep a few things in mind:
- Maximize the program’s services. Utilize your financial workplace benefits to tackle life’s financial challenges. Most programs offer financial mentoring through various mediums. Seek advice on your financial issues and allow a coach/mentor to provide you with practical strategies, alternatives and actionable steps to reduce your financial stress.
- Take advantage of other employee benefits. Incorporate other benefits into your financial wellness program. Use financial resources to help you run projections and monitor your 401k. Budget your healthcare costs with these tools. Research indicates those who tap into these financial wellness programs often are more likely to stay on track than those who don’t.
- Evaluate your progress. Strengthening your financial well-being is a process. If your employer’s financial wellness program provides various tools to monitor your finances, use them. Weigh your progress yearly and take advantage of any support groups, webinars, or individual one-on-one counseling sessions offered by these programs.
As the workforce continues to evolve, managing these programs and resources effectively is an important aspect for both parties. Providing and utilizing a strong, effective Financial Wellness Benefits Program will set the foundation for a lifetime of financial well-being.
by admin | Apr 7, 2017 | Human Resources, Retirement
With apologies to the band R.E.M., this article is not about their music, nor their album, but about how automatic enrollment has significantly helped people. Think of all the payments you currently have automated. You probably have automatic deposit of your paycheck, automatic bill pay for your utilities and other monthly bills, and maybe even a recurring automatic payment and delivery of pet food from Amazon. Now, think of something that’s important that you wish you could automate. This is not the time to mention your daily fix of Starbucks, but about saving enough money for retirement.
There are families that have a similar system where they placed a large jar in the kitchen. Everyone, kids included, would put their spare change in the jar every day. At the end of the month, the family would use that accumulated money in a fun way. An article titled, “Automation Making Huge Retirement Plan Impact,” in Employee Benefit News references how a defined contribution plan provides an excellent way for employees to seamlessly save money for retirement. As employees started joining the plan, with a typical contribution of 10 percent or higher, including employer matching, participation increased nearly 20 percent in the company’s retirement benefit according to the article. This was up more than seven percent from just five years ago. Looking at this by generation, millennials are used to automation and, consequently, are reaping huge rewards from this type of plan.
However, all age groups benefit and a company can modify the plan to increase participation. For example, if a company has a matching rate of 50 cents on the first three percent to 25 cents on the first six percent, it automatically gets employees saving an additional three percent they wouldn’t normally save. Another way is to have annual automatic increases in contributions. A bump of a percentage point every year up to a maximum rate will help employees the earlier they start.
Of course, there should always be an opt-out option for people who don’t want to have the contribution rate increased, have a separate retirement plan, or simply don’t want to save using the company plan.
By Bill Olson, Originally Published By United Benefit Advisors
by admin | Jan 26, 2017 | Benefit Management, Employee Benefits, Retirement
Employers I’ve talked to all have the same goal: to help employees build a sound retirement plan to achieve financial success and security. The main components to protect an employee’s financial future are managing a nest egg, growing investments, and safeguarding against uncertainty.
The Missing Component
As an employer, you may be missing a key component in safeguarding against uncertainty – the need for long-term care. Seventy-five percent of people over the age of 65 will need some form of long-term care in their lifetime1, however, far fewer are financially prepared to handle that need. With nursing home costs averaging $84,000 per year2, it’s not surprising that many Americans are having to spend down their retirement savings to pay for care. Long-term care is custodial care received in an assisted living facility, nursing home, or your own home should you need assistance with activities of daily living or suffer from a severe cognitive impairment.
Long Term Care Insurance
Savvy employers are helping fill the uncertainty gap by introducing long-term care insurance to employees. Employers can offer long-term care insurance plans with reduced underwriting and group pricing that employees wouldn’t be able to get as an individual. Better pricing and easier approval make the product accessible to employees that couldn’t normally qualify for coverage.
Long-term care education is key to helping employees protect their retirement savings. Without your help, employees can fall victim to widely held misconceptions. They may think:
- Other benefits will cover them
- The government will pay for their care
- This is only for old people
The truth is that long-term care insurance is the only benefit that covers this type of custodial care, and government options (Medicaid) are only available to people with low income and limited resources.
Shield and Supplement the 401(k)
Do you already contribute to your employees’ 401(k) plan? If so, you can spend the same amount of employer dollars, but provide richer benefits by pairing a 401(k) with long-term care insurance. By taking a small amount of contributions from the 401(k) plan and directing those toward your long-term care insurance premium, the resulting benefit can provide more than $200,000 of long-term care coverage and only slightly adjust the total 401(k) plan value.
Unlike other benefits, where providers may change from year to year, the majority of long-term care insurance purchasers will hold on to their original plan for life, and 99 percent of employees who have the coverage keep it when they move to their next employer, or into retirement. You can think of it as a “legacy benefit” that employees maintain for life to protect their retirement savings.
By Megan Fromm, Originally published by United Benefit Advisors
