Engage employees with financial incentives
An ongoing trend in wellness programs is the use of employer-sponsored financial wellness incentives. Previously, incentives for wellness programs primarily focused on employee health programs. Employers with those programs offer incentives such as health care premium reductions and Health Savings Account (HSA) contributions to improve personal accountability, encourage healthier lifestyles and minimize health stressors.
But employers are also now offering financial wellness incentives in the form of identity theft protection services, tax preparation support, financial planning and student loan repayment programs to help employees across all career stages. Some are even considering supplementary contributions to 401(k) accounts. We expect this trend to grow, particularly in the case of student loan repayment programs (given the average student loan debt has doubled since 2007) and for financial planning (as employees bear more responsibility for benefits-related financial decision making).
At the same time, employers are finding creative ways to encourage utilization of financial wellness programs, from traditional communications to direct incentives. These include offering reward program credit for calling a financial planner or utilizing a wellness tool or website, or giveaways for attending financial education sessions.
Employees facing tradeoffs when deciding where to invest
Saving for college continues to be a challenge for families who know tuition bills are looming but aren’t sure how, or where, to save. Of participants who took the EY Financial Wellness Assessment, and for whom college savings for a dependent was a goal, 43% did not feel they were setting aside enough money. For many families, saving for continually escalating tuition costs comes at the expense of other important savings goals, including retirement funding.
For younger employees, having to prioritize paying off student loans over saving for retirement means time and money lost as they sacrifice the additional value compounded savings brings to retirement contributions made in their early career years. Just as employers are seeking solutions to enable healthy work/life balance for their employees, so too must employees actively participate in finding the right short- and long-term solutions to enable individual financial goals.
The good news
Yet, for those who completed the EY Financial Wellness Assessment, there is hope when it comes to planning for future financial health. Seventy percent of respondents indicated they have never paid a bill late. This, in turn, positively impacts personal credit scores and the ability to borrow money at more favorable interest rates.