The facts are irrefutable: Most Americans are not prepared to retire. Chances are this fact applies to some of your employees. The evidence in survey after survey indicates as much. To cite the data yet again is to beat a dead horse.
Instead, it’s more productive to focus on how employers and their employees can work together toward the goal of more comprehensive retirement readiness. And although we know that retirement plan features like auto enrollment and escalation are good, often times they’re not enough to ensure adequate savings. Like physical fitness, financial fitness needs a more comprehensive approach.
If you have a desired fitness goal such as maintaining a healthy weight or running a marathon, proper training and adherence to a disciplined routine are keys to achieving those goals. Similarly, having sufficient assets to live on in retirement requires disciplined planning. Yet most employees face obstacles such as lack of knowledge, time, and/or motivation to do the planning and execution, despite the fact that a significant portion of their income in retirement depends on how much they’ve saved during their working years.
We all know there are no shortcuts to achieving and maintaining physical wellness. The same holds true for financial wellness. As retirement programs shift the investment and longevity risk to individual workers, just how do you create a sense of urgency and discipline for saving with your employees amid the complex rules required to understand the keys to financial security?
The notion of financial wellness is not a new concept, but it is a relatively new viewpoint as it relates to employer-provided benefits and employee wellbeing. The annual “MetLife Study of Financial Wellness Across the Globe” defines financial wellness as “a multi-faceted concept that describes the overall financial health of an individual,” influenced by factors such as financial literacy, financial behavior, financial situation, and financial stressors.
In other words, your age, marital status, understanding of basic financial concepts, ability to save, compensation, benefits, liquidity, and debt influence your overall financial wellness.
This series continues in Part 2, with a look at why financial wellness matters to employees and employers.
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