The 2008 recession was the single biggest financial catastrophe to hit the U.S. since World War II. Though this may seem like old news, and the country may seem well on its way to recovery, millions of Americans (and many of your employees) are still feeling the effect of this economic disaster in one way or another.
Currently, more than 44.5 million Americans owe more than $1.55 trillion in student loan debt. The average monthly student loan payment is $393, and 11.5% of student loans are 90+ days delinquent or are in default.
On the opposite end of the career spectrum, nearly half of American families have no money set aside for retirement. A recent study showed that almost 80% of Americans work for an employer that offers a retirement plan, yet U.S. Census data suggests that only 40% of employees contribute to retirement accounts.
No matter the generation, Americans are feeling the squeeze. In fact, nearly 80% of Americans live paycheck to paycheck, according to a recent CareerBuilder report.
No company wants to see their employees struggle or to see a dip in productivity. This is exactly why introducing and fostering financial wellness programs can help improve everyone’s bottom line. A majority of employees want help with their finances, but many don’t know what’s available, where to seek help or how to get started.
Here are the top financial wellness programs for 2019 to give employees the financial security they need to be happy, healthy and stress-free.
Student Loan Repayment—Paying Off Past Debt
Student loan repayment programs are one of the hottest new employee benefits to take charge in 2019.
The premise is simple: employers contribute a set amount each month towards an employee’s student loan principal to help pay down the debt. This could be any amount—as small as $50 per month or a few hundred per pay period. This amount could also be scaled based on tenure or be offered for a specified amount of time or up to a certain dollar amount.
First Republic takes a tiered approach with $1,200 the first year of employment, $1,800 the second year and $2,400 in each subsequent year. Nvidia also offers a generous program with full-time and part-time employees eligible for up to $6,000 per year, up to a total of $30,000.
In a recent interview with SHRM, Kevin Fudge, Director of Consumer Advocacy at American Student Loan Assistance (ASA), said:
“Young workers feel highly stressed as a result of the burden of student debt, and that debt clearly impacts their health and productivity in the workplace. Employers should realize that in order to retain the brightest young talent and demonstrate their commitment to employee well-being, they need to provide concrete and straightforward solutions to help alleviate the burden of student loan debt.”
An ASA survey also revealed some compelling statistics about how appealing student loan repayment really is from a recruitment and retention perspective:
- 86 percent of employees would commit to a company for five years if the employer helped pay back their student loans.
- 92 percent would take advantage of a match for student loan repayments similar to a 401(k) match.
- 79 percent would take advantage of free access to a student loan debt counselor.
Do we have your attention yet? You can learn more about student loan repayment as a benefit through our partner, Tuition.io.
Employer Loans & Instant Pay—Managing Current Finances
Life happens, and sometimes that involves unexpected and even devastating financial burdens.
Consider this—60% of households faced an unexpected financial shock last year. And, 63% of Americans are unable to handle a $500 car repair or a $1,000 emergency room bill.
Personal finance is a top cause of stress, which can quickly bleed into the workplace. Help alleviate this concern by offering low-interest loans to employees.
Companies like TrueConnect can help employers provide financial security to their employees. Loan programs can help cover unexpected expenses and can help employees with little to no credit build their scores over time. These loans are offered at a much lower interest rate than private or payday loans and are taken directly out of the employee’s paycheck for fast and easy re-payment.
While employer loans can be a great solution for larger financial surprises, they might not be a good fit for every industry or employee type. And what about smaller financial concerns? Instant pay apps have grown like wildfire over the past few years as a way to provide employees with more financial independence and security. In fact, adoption has quadrupled over the past three years.
As the name suggests, ‘instant pay’ apps provide employees with immediate access to earned wages versus the traditional two week waiting period. Advocates of the technology suggest this pay model could reduce reliance on costly payday loans and other predatory lending practices when employees are in a pinch.
Though very different—both of these financial wellness solutions can be great options to give employees peace of mind during otherwise stressful financial situations.
Retirement Account—Planning For The Future
With a staggeringly high number of Americans having little to no retirement savings, engaging employees with their retirement accounts is more important than ever.
A key component of helping employees make the most of their retirement account is to encourage active engagement and to incentivize contributions. Decision support tools can help expedite this process, with tools that can suggest a contribution amount and interact with employees during the process.
Strategic plan design can also help boost contributions, like a tiered match approach. For example, instead of offering a straight 3% match for contributions, match up to 3% of the first 6% of employee contributions, which would essentially double employee contributions. Similarly, consider auto-enrolling employees in the retirement plan. This would still allow employees to opt-out of contributions but would default to recommended plans and programs to increase enrollment and reduce friction related to setting up accounts.
Salary increases or bonus disbursements are also a good time to keep retirement savings top of mind by reminding employees about their current account status and that they can adjust their contribution amount at any time.
Ready To Beef Up Your Benefits?
Give employees the tools they need to find their financial nirvana. Contact us today to discuss unique financial wellness programs that can help improve your recruitment and retention!
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