Young People, Financial Wellness, and Some Interesting Survey Data
Many retirement plan sponsors are aware that financial wellness/independence is a powerful benefit that should be strongly considered or enhanced. Generally, employees who are more financially healthy are able to save more for retirement (and other purposes). And, thanks to the magic of compounding, that savings can have a tremendous impact on retirement readiness, particularly for younger employees. This concept has been proven previously by automatic enrollment, where the additional savings resulted in younger generations of employees far more ready for retirement than their older counterparts.
However, offering a financial wellness/independence program does not necessarily guarantee that employees will engage in it. Many retirement plan sponsors wonder whether Millennials and Gen Z employees will actually participate or whether it would simply become another unused benefit.
At the most recent Retirement Advisor Council annual meeting, Lincoln Financial Group shared the results of a study where these very questions were posed. The answers were fairly definitive: 73% of Millennials and 74% of Gen Z respondents were looking to their employer to offer financial wellness/education services. Thus, if this survey is any indication (and the sample size here was decent), the demand for services that help young employees improve their financial position is clearly there.
But what types of services do these employees want their employer to provide? Unlikely to come as a surprise, the survey indicated that assistance in saving for retirement was one of them, ranking number one with Millennials and number three with Gen Z. However, the highest overall ranked service, which typically does not receive as much ink in discussions of financial wellness services, was budgeting assistance.
Now, I would argue that assisting with budgeting also assists with saving for retirement, since people who budget generally save more than people who don’t. However, it was amazing to me that a financial topic, that is seemingly so mundane, ranked so highly with young people. I believe that there is a lesson here for retirement plan sponsors in designing their financial wellness/independence programs.
Thus, given the importance of financial wellness as an employee benefit, and the interest from younger employees, retirement plan sponsors should take action sooner rather than later, with retirement savings, budgeting, and perhaps an emphasis on emergency savings, given the COVID-19 pandemic, as some of the leading topics.
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. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.
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