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Employee Financial Concerns: How Retirement Plan Sponsors Can Help

Employees have a variety of reasons for why they cannot afford to save (or save more) into their employer’s retirement plan. From student loan and credit card debt, to healthcare costs, there are many obstacles for today’s employees.

However, many of these employees can, in fact, afford to save! Sound impossible? It comes down to three relatively simple steps: track daily spending, set a budget, and create a statement of net worth. The results could mean tens, hundreds, or even thousands of dollars in “found money” each month!

Once an employee’s expenses versus revenue are tracked, there are additional, relatively effortless actions that can further reduce expenses and improve finances; some of these include cord-cutting, participating in cashback websites, decluttering, and/or developing passive income streams. For cases where simple measures aren’t enough, more comprehensive financial assistance programs can help, such as debt consolidation, student loan refinancing/payment assistance, automated emergency savings vehicles, etc. And, on the healthcare expense side, providing an HSA (presuming an employer maintains the required high-deductible health plan option) and actively promoting it as both a healthcare and retirement savings vehicle can help keep employees from becoming financially crippled by unexpected healthcare expenditures while employed or in retirement.

But most people do not get this far without a little help. Consider how many of your organization’s employees would save into an IRA on their own initiative. For most plan sponsors, this number would be nothing to brag about (there’s a reason why state-sponsored auto-IRAs are springing up to cover employees who do not have traditional retirement plans!).

By assisting employees with keeping their financial houses in order, plan sponsors can encourage optimal and efficient utilization of employee benefits (such as retirement plans), help increase employee productivity by alleviating some financial distractions, and help ensure healthy retention and advancement of employees, since fewer people would need to delay retirement due to finances.

Yet, according to a recent survey, instead of offering assistance with some of the aforementioned ideas, many employers offer “financial wellness” programs that focus on employee discounts, that ironically might actually worsen an employee’s financial situation by encouraging him/her to purchase goods and services that they otherwise would not!

I think plan sponsors can - and will - do better! Do you agree? Let me know on Twitter or at

Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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