When employers build awareness around benefits packages, they can help employees achieve financial wellness.
A common stumbling block to employee happiness is their financial well-being. Employees work to maintain their current lifestyle, but most also look forward to a financially healthy retirement. The problem is many employees don’t know how to achieve that financial well-being both present and for the future, and employers aren’t doing enough to help their staff meet their financial plans.
Employees need to take advantage
Many organizations offer a lot of different benefits, ranging from health care to 401(k)-matching to wellness programs, according to Chris Luongo, vice president of product marketing and business development with ADP Retirement Services. It’s up to employees to take advantage of these benefits. If they aren’t paying attention to them, don’t think they are important, or just don’t understand them, they are missing a big opportunity.
Also take advantage of the payroll deduction to participate in these benefits, especially retirement, Luongo advised. Contributions to a 401(k) are deducted pre-tax, reducing an employee’s taxable income in the current year, so try to maximize your contribution. It might mean a slightly smaller paycheck now, but you’ll most likely adjust to the income you receive, all while building for the future.
Employers need to drive awareness
It’s up to employers to make sure their employees drive awareness surrounding the offered benefits and to promote the programs they have. This could include financial literacy programs to build basic skills and take action on financial wellness. “This provides a benefit to the employee but also the employer in reducing employee stress related to their finances and being able to attract and retain top talent because of a competitive benefits package,” said Luongo. ADP offers retirement benefits that allow employees to achieve their goals and tailor plans based on age and need. Someone who is 25 will be thinking and planning for retirement much differently than someone who is 55, Luongo added.
Be simple, be concise
Financial management is stressful for most people, said John Guido, president of Retirement Insights, LLC. It’s important to communicate financial well-being in a simple and concise manner to get employees to buy in. Focus on how to meet financial goals rather than tell employees what their financial goals should be.
Here are some of the obstacles employees face that hinder their financial well-being and their preparation for a financially healthy retirement:
1. Not building retirement savings early
The earlier you start on your retirement savings, the more likely you’ll build a retirement account that will meet your expectations.
2. Not understanding debt management
When employees better understand the true cost versus true spend, they can then manage those costs on a regular basis, putting themselves in a better position to manage their benefit programs. “The longer you wait to address issues like credit card debt and other debt issues, the more difficulty you’ll potentially have reaching your retirement savings goals,” said Luongo.
3. Not paying yourself
In terms of retirement, explained Guido, being able to pay yourself towards future savings is critical. How much you invest in yourself will depend heavily on how much you can reduce your current expenses.
4. Not letting the money grow
Once the money is put aside, leave it there. It’s tempting to look at benefits accounts as emergency funds, but if you dip into it early, you’ll pay penalties now and won’t have the funds later for a financially healthy retirement.
The views expressed in this article are the speakers’ own and not necessarily those of ADP, LLC or its affiliates. The article is for general information only and is not intended to provide investment, financial, tax or legal advice or recommendations for any particular situation or type of retirement plan. ADPBD-201813-0359