27 November 2022

Workers with Leverage Raising Expectations for Financial Wellness, 401(k) Benefits

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The so-called Great Resignation has created a seller’s market for jobseekers.

Nearly four-and-a-half million Americans quit their jobs in November, continuing an ongoing trend, according to U.S. Bureau of Labor Statistics. As a result, employees have more leverage than ever to demand better benefits packages from their employers.

Employees are navigating such issues as health care costs, mountains of student debt and uncertainty around retirement and the future of Social Security. Many workers are looking for more financial stability and support.

Betterment’s 401(k) business recently researched the state of employee financial wellness by surveying 1,000 fulltime workers.

“Our research shows that employees are still hurting financially from the economic impacts of the last 18 months, with many having had to tap into their emergency funds since the start of the pandemic,” according to the survey report.

“While most employees did not leave their jobs voluntarily over the past year and a half, they do desire additional support from their employers to avoid being enticed to look elsewhere. Financial benefits are now their top priority, above in-office perks and even vacation time, and employees are looking for particular help with retirement planning and student loan debt.”

Among the highlights of the survey:

1. State of the workforce. Despite the high turnover rates facing many industries, the vast majority of full-time employees surveyed (94 percent) didn’t voluntarily quit their jobs in the past 12 months. However, 28 percent currently are in the process of looking for a new job.

“We see the impacts of COVID-19 across a number of responses — burnout, isolation and leaving the workforce to take care of personal issues were all highly cited factors,” the report said.

“With the portion of people who left for a job that was better suited to them nearly equivalent to the portion of those who left for better benefits or pay, it’s clear that the pandemic has made workers reevaluate what they need to be satisfied with their jobs. Ideally, it should be both financially and emotionally fulfilling.”

2. Employee expectations. Amid the financial challenges of the pandemic and the ongoing competition for talent, employees are demanding more support from employers than ever before. Seventy-eight percent said it’s important that their employer offer financial wellness benefits, and 71 percent said these benefits are even more important now than they were pre-pandemic. Nearly 70 percent rank having better financial wellness benefits above an extra week of vacation.

When asked to prioritize financial wellness benefits, employees ranked access to a high-quality 401(k) and 401(k) matching program as most important, followed by a wellness stipend and flexible spending account or health savings accounts.

An employer-sponsored emergency fund ranked fifth. This benefit has come into the spotlight more since the start of the pandemic, and it shows an employee appetite for employers to help them accumulate emergency savings.

3. Retention implications. Three-fourths of workers likely would leave their job for an employer that offered better financial benefits. This is especially true among younger generations. Employees indicated that the top three most enticing benefits are a high-quality 401(k), a 401(k) matching program and a flexible spending account or health savings account.

One-third said their employer has begun offering new financial wellness benefits over the past year, with the most common being a 401(k), wellness stipend and 401(k) matching program, which aligns with what employees indicated they want from their employers.

4. Student loan debt. More than one-third of respondents are responsible for student loan debt, either their own or someone else’s. Despite this debt, people with student loans are doing a good job of stashing away money: 63 percent of student loan borrowers have an emergency fund, compared to 67 percent of those without loans.

“It’s clear that employees want greater support with financial wellness,” the report concluded. “This means helping them take advantage of the great benefits your business currently offers, as well as rethinking benefits offerings to adjust to their current needs. If your company is still working remotely, maybe it’s time to consider redirecting the old coffee-and-snacks budget toward a more flexible wellness stipend that employees can use to support their current needs while working from home.

“Your benefits package can’t — and doesn’t need to — meet every employee’s every need. However, there are simple, cost-effective ways to provide them with a holistic financial wellness solution that can offer retirement benefits, emergency funds, investing, access to financial advisors and other planning tools. Great benefits packages don’t need to be expensive or time-consuming anymore, regardless of whether your business has two employees or 2,000.”

Click here for the original article.

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