The Stress of It All: DC Plan Participants Need More Than Just Retirement Advice

While plan sponsors already support employees’ retirement readiness, the report found that for many employees the importance of retirement planning fades in the face of more immediate concerns.

Almost 47% of the survey respondents said they are living paycheck to paycheck.

“That’s a huge number,” Yost said during the press briefing.

And not only that, she said, almost 50% are not completely confident that they could find $1,000 in an emergency.

The survey also examined the role employers can play in helping to mitigate their financial troubles, since the survey found that the vast majority (80%) of employees agreed that their employer should provide resources to improve their financial wellness and decrease their stress.

 “What we’re seeing is a cultural shift within how employers are trying to engage employees around thinking about retirement and a broader, more holistic footprint,” Yost said during the briefing.

At a financial wellness workshop that State Street hosted late last year, the Fortune 500 plan sponsors in attendance agreed that there is a clear rationale for adopting strategic financial wellness programs. As the report says, “Employers recognize that by helping reduce employees’ financial stress, employees’ overall stress levels may decrease as well. This outcome has obvious benefits for individual employees and may also increase productivity, decrease absenteeism and boost the corporate bottom line.”

From its conversations with Fortune 500 companies, State Street gathered a list of tips and best practices for employers who want to establish or expand a strategic financial wellness program.

BEST PRACTICES FOR PLAN SPONSORS:

1. Prioritize. “Set a financial wellness agenda, focusing on areas in which your participants need help and your organization is equipped to assist,” the report states. “Consider a measured approach to avoid overwhelming both administrative staff and employees.”
2. Follow the numbers. “Quantify the real costs of financially unfit employees to your organization and track changes to those costs over time,” the report says. “Consider including data on absenteeism, medical spending, performance ratings and turnover, and aggregating it based on age and salary or job level.”
3. Promote the tools you already offer. “Make the tools you already have more accessible to employees,” the report says. “Consider putting them all in one place, organizing them by life and/or career stage and promoting them in creative ways to boost utilization.”
4. Collaborate. “Bring your service providers together to determine how you can focus their collective resources on specific communication priorities — whether it’s explaining how to use a health savings account (HSA) or describing how the retirement plan’s default option works,” according to the report.
5. Set a schedule. “Plan your promotion strategy with themes that make sense for both the calendar year and your benefits calendar,” the report says. “For example, make January ‘estate plan preparation month’ to build on employees’ New Year’s resolutions. In February, leverage any available tax preparation benefits, and so on.”
6. Automate for emergencies. “Consider making savings accounts available through credit union partnerships or even automatically enrolling employees in an emergency savings fund in conjunction with your retirement savings plan,” the report states.

—Related on ThinkAdvisor:

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