Financial Wellness Programs: The Key To Employee Participation In Retirement Savings

January 10, 2020
Mastery of Finances Frees Up Cash

Wellness programs are an investment in employees that pays off for savvy companies. Financially healthy workers are more productive and generally happier about their prospects. That’s why many companies are implementing or expanding their programs. They’re encouraging employees to make the most out of finances.

One benefit of a financial wellness program is that employees have more funds to invest in their retirement. Since retiring to a comfortable lifestyle is the top priority for most workers, offering them a way to accomplish the task is rewarding and a fantastic incentive.

One reason employees can save more after being enrolled in a wellness program is because they’ll have more money to invest. Many of them are genuinely in debt when they start and aren’t doing an excellent job of managing finances. With training under their belt, they’re able to work within a budget. That way, they don’t waste as much of their income. The leftover capital is then available for use in a 401K or any suitable retirement vehicle.

Making Sense of the Numbers

Companies that want to invest more in wellness need to understand the number. One of the problems coming up with accurate forecasts is that employees don’t follow one prescribed program. Some of them care about savings, and others want more money for travel. For any executive tasked with explaining the benefits of their program, it will help to quantify how it benefits each subset of workers.

Dig in and find out what the current needs are and show how a wellness program will help. Statistics are useful for presenting a solid case that gets approval. Few, if any, companies won’t benefit from a plan, so making the argument will be easy enough. It might be worth telling the story of a few employees, to personalize the mission statement.

Make Participation Easy

Many companies are doing their best to make participation in a wellness program easy for their employees, including new ones. It’s now relatively easy to roll-in a retirement plan thanks to auto-portability.

That term refers to the technique of taking someone’s 401(k) and seamlessly transferring it from the old employer to new. Doing that is a way to make a transition to a wellness plan much more accessible.

The portability movement is a big step towards employees being able to move their retirement account when they move jobs. The process has long been a clumsy one with many penalties for early withdrawal. Billions of dollars in fees are the result of early cash-ins, which puts a drain on the total retirement savings for workers.

Wellness Is a Necessity

61% of workers claim in research by Career Builder that they live paycheck to paycheck, which explains why so few are taking full advantage of company-provided retirement plans. Even making a six-figure income did not make someone immune to financial woes. Three out of ten workers in that income range also say they’re one paycheck away from disaster.

Those are eye-catching numbers because they illustrate how dire the situation is for people. Without extra money, there’s little thought about adding to their retirement accounts. Instead, they’re doing their best to keep their heads above water. Any wellness program will do its best to change that outlook by modifying mindset and behavior. It’s a challenge, but one that more enterprises are accepting because it makes their workplace more competitive.

Financial Well-Being and Good Health Are Related

Enduring an unfortunate financial situation is stressful for anyone. Workers who have high debt loads and little free cash flow also suffer emotionally and physically. Companies that are looking to improve their lives will need to take a holistic approach that puts financial health at the center of the equation.

The situation brings a whole host of problems:

  • Increased absenteeism happens due to stress.
  • Frequent personal phone calls to deal with finances are commonplace.
  • The stressed-out worker displays the lack of ability to concentrate‍.
  • Too much pressure may result in the risk of fraud or theft.

None of these events are desirable, so it’s worth preventing them at all costs. If a company has a large percentage of workers in the same boat, implementing a financial wellness plan is a matter of self-defense as well as a preventive measure. If any of these personal problems grow out of hand, it will adversely impact the business.

Physically healthy workers perform better. So do people in a great mental state and those who are happy with their employment and future status. All of these beneficial states are possible with the right types of programs in place.

Any management team that can convince themselves of the benefits of wellness will be able to recoup their investment in the program. Tangible results happen all the time, and they are quantifiable. If it’s your job to convince others about the efficiency of your proposals, be prepared to show facts. It won’t take much to convince people there’s a problem. Their experience with workers and the statistics bear out the fact that employees are in poor financial shape.

Can Your Company Benefit From a Wellness Program?

Consider a few critical scenarios that indicate the need for one at a company.

If the company has meager participation in retirement savings plans, it’s a reliable indicator people aren’t saving. They don’t keep extra money because they don’t have any.
If employees are always looking for money from their 401(k) savings plans to pay a debt, it’s a sign that financial wellness would benefit them.

Signs that employees are stressed out financially should not be hard to spot. Keep in mind that the situation is nothing unique to your corporation. It’s happening all over the country as many people have high debt loads. Their debts are high enough that the load threatens their ability to save for a rainy day.

Get More People to Participate

Wellness plans are fantastic, but they need people to join. That means a big part of the job for anyone managing the program is to create awareness among the workforce that one’s available. It’s also vital to explain the benefits and to educate everyone about why they should join. It takes motivation to get people to buy in and to begin to change their behavior.

It’s worth bringing in outside experts to speak with workers. Sometimes it takes a third-party perspective to get people to understand more about the program and its benefits. Most employees will be happy to admit that they possess no education about finances and retirement, so it’s good to encourage them to learn more. With the proper information at their disposal, they can make changes. The behavioral modification takes time and reinforcement. Mostly, however, it takes people seeing benefits. Once they do, many former over-spenders will become savers fast enough.

Utilize Your Employee Assistance Program for Outreach

Use your current employee assistance program to aid people who want additional help for their financial situation. If you’re looking for an increase in benefit participation, start where the need is highest. People who are seeking help will likely be willing to hear how wellness helps.

It’s also worth showcasing success stories to get people to join. Nothing is more motivational that someone in their position which has already achieved success. Whether it’s weight loss or achieving financial independence, success motivates everyone. Show them examples of how their lives will improve, and people who have completed their goals. Doing that will make benefit participation soar.