Steep inflation and interest rates helped shape much of the 2023 fiscal year. Through heightened financial stress and economic uncertainty, employees increasingly see employer-sponsored retirement plans as an essential part of their benefits package.
The annual Vestwell Savings Industry Report surveys over 1,200 working Americans, revealing challenging financial circumstances amid today’s economy.
Student loans are a significant hindrance on an individuals’ ability to save for retirement. By addressing this issue, employers can strengthen employee retention and demonstrate a commitment to their employees’ financial well-being. Most (93%) employees with student loans say that their student debt has affected their ability to save for retirement. More than eight in 10 (85%) employees expect their employer to offer retirement benefits as a means to offset their debt.
For many, high debt equates to being unable to save for retirement, among other things. Nearly four in 10 (38%) respondents have less than $1,000 for emergency savings, and nearly three in 10 (29%) have none at all. These challenges present the opportunity for employers to aid their employees in financial stability and retirement preparedness.
While workplace retirement plans are becoming an expectation for employees, the results of the survey indicated increasing demand for other workplace financial benefits, such as solutions for emergency and health savings. Respondents’ top requests for additional benefits include:
* Saving for retirement – 52.5%
* Paying off debt (mortgage, student loans, credit cards, etc.) – 26.4%
* Saving for health care expenses – 8.8%
The future of workplace benefits extends beyond the traditional 401(k). While retirement savings continue to be a priority for many, there are multiple areas where employees are seeking additional support.
“Employees are increasingly viewing financial wellness offerings as a ‘must-have’ in today’s workplace environment. With inflation fears and uncertain economic outlooks affecting retirement goals, employers and advisors have a huge opportunity to enhance their offerings beyond the traditional 401(k),” said Aaron Schumm, founder and CEO of Vestwell.
Employers can play a pivotal role in reducing employees’ financial stress by integrating education savings benefits and establishing employer-sponsored emergency savings accounts. Businesses can offer a variety of programs, empowering employees to make informed savings choices and positioning themselves to retire within their projected timeframe.