As a business owner, you probably know that attracting and retaining top talent is about more than a salary — you also have to offer competitive benefits. Typically, that has included a retirement plan.
Helping your employees prepare for retirement is a great thing but, more and more, businesses are finding value in moving beyond that to think more broadly about the overall financial wellness of their employees.
Employees worry about money. According to a 2017 PricewaterhouseCoopers survey, 53 percent of all employees are stressed about their finances. Nearly one in three employees say finances have been a distraction at work. Almost half of those employees spend three or more hours a week handling their personal finances at work. Plus, stressed employees are also twice as likely to miss work because of their personal financial issues and more inclined to cite health issues caused by financial stress. So the more you can help them, the more productive they’ll be.
So what does it really mean to think broadly about financial wellness? Here are three things you might want to consider implementing:
Along with offering a retirement savings plan, help employees understand why they should participate and how to make the most of every dollar they save for retirement. Nearly one in four companies offer this type of financial education in a group setting, according to a 2016 survey by the Society for Human Resource Management (SHRM). These typically happen in “lunch and learn” settings, focusing on topics like:
- How to find money in your budget that you can put toward retirement savings
- The value of compounding and why it’s important to save early for retirement
- How to make the right investment choices within your 401(k) offerings
- Why to avoid cashing out or tapping into your 401(k) balance. Nearly one in three employees has already withdrawn money held in retirement plans to pay for expenses other than retirement, and 44 percent think it’s likely they’ll need to.
PERSONAL FINANCIAL PLANNING
In addition to group education, the SHRM survey noted that 27 percent of companies are also beginning to offer one-on-one financial planning that focuses not only on retirement planning but also on managing debt; obtaining a mortgage; and mitigating financial risk through disability income, life and other types of insurance. By offering access to a financial planner who can help your employees create comprehensive financial plans, you can help employees tackle any gaps in their finances that are keeping them up at night (or distracted at work).
ADDITIONAL PERKS FOR KEY EMPLOYEES
If you offer 401(k)s, 403(b)s or SEP-IRAs, they must be offered to all employees. However, you can tailor additional benefits to meet the retirement needs of key employees. These benefits could include one or more of the following:
- A supplemental executive retirement plan (SERP), through which you could provide additional income to yourself or employees at a later date, usually at retirement.
- An elective deferred compensation plan, which allows employees to forego receiving a portion of their current income until a later date, usually retirement.
- Life insurance benefit plans that accumulate cash value, which could be used to supplement retirement income.
- Bonus plans, which provide extra income based on performance.
Stressed employees are twice as likely to miss work because of their personal financial issues.
As you think about implementing any of these strategies, remember that if you work for the business, you’re an employee, too. The more benefits you put in place for your workers, the better positioned you’ll also be to increase your own financial security — and that of your family.