The benefits of financial wellness counseling
Are your employees being properly educated on the benefits on their financial well-being? If not take a look at this article from Benefits Pro about the value of educating your employees in financial wellness by Jack Craver
Money Management International, a nonprofit credit counseling organization, is touting the results of a recent survey it conducted as evidence that employers can significantly reduce stress among their employees by offering them financial counseling resources.
MMI announced recently 86 percent of the 150 employees it provided financial counseling to at an Oregon-based nonprofit health agency say they have less stress related to money as a result of the counseling.
In addition, most of the employees at Samaritan Health Services say the counseling led to them achieving certain financial goals, such as reducing debt (60 percent), setting aside more money for retirement (38 percent), boosting their credit score (30 percent) or buying a home (8 percent).
"At MMI, we know that financial coaching, counseling, and education work, but seeing the incredible, positive impact this program has made on the financial outlook of these clients is simply amazing,” says Julie Griffith, Mapping Your Future account manager, in a statement accompanying the study’s release.
Other research has shown employers are increasingly viewing financial counseling as a key component of wellness initiatives due to the significant psychological and emotional toll money-related anxiety takes on employees.
In addition to causing depression, sleep deprivation and all sorts of health problems that reduce an employee’s productivity, financial stress often distracts employees from their work. A survey last year showed that 37 percent of U.S. employees report spending time on the job thinking about or dealing with personal finances.
The awakening to the importance of financial wellness coincides with a number of studies which shed light on young Americans’ lack of savings. One study found a solid majority of Americans have less than $500 in savings. Another found that the U.S. personal savings rate was just 5.7 percent, roughly half of what it was 50 years ago.
See the original article Here.
Source:
Craver J. (2017 March 08). The benefits of financial wellness counseling [Web blog post]. Retrieved from address https://www.benefitspro.com/2017/03/08/the-benefits-of-financial-wellness-counseling
Why employers should rethink their benefits strategies
Has your employee benefits program grown old and stale? Take a look at the great article from Employee Benefits Advisors about the benefits of upgrading your employee benefits to match your employees' needs by Chris Bruce.
Historically, employee benefits have been viewed as a routine piece of the HR process. However, the mentality of employees today has shifted, especially among the growing population of millennial employees. Today’s workforce expects more from their employers than the traditional healthcare and retirement options, in terms of both specific benefit offerings and communications about those offerings.
For companies, it’s critical they address the evolving needs of their workforce. With unemployment rates plunging to their lowest levels since before the financial crisis, the search for talent is heating up, and organizations need to work harder than ever to retain top talent in a competitive job market. To do this, I see three steps that organizations need to take when rethinking their benefits strategy and engaging with employees: embrace a proactive rather than reactive benefits strategy, think digital when it comes to employee communications and consider the next generation of employee benefits as a way to differentiate from the competition.
1. Reconsider your benefits evaluation process
The benefits process at most companies is reactive — executives and HR only look to evaluate current offerings when insurance contracts expire or a problem emerges. When the evaluation does happen, the two factors that often concern employers the most are product and price. Employers often gravitate toward well-known insurers that offer the schemes that appear familiar. However, this can often lead companies to choose providers who fall short on innovation and overall customer experience for employees.
This approach needs to be flipped on its head. Companies should be proactive in determining which benefit schemes best meet the needs of their workforce. The first step is going straight to the source: talk to employees. Employers can’t know what benefits would be most appealing to their employee base unless they ask. By turning the evaluation process to employees first, companies can better tailor new benefits to meet the needs of their workers, and also identify existing benefits that might be outdated or irrelevant, therefore saving resources on wasted offerings.
Data and analytics also are playing an increasing role across the HR function, and benefits is no exception. By leveraging technology solutions that allow HR to track benefits usage and engagement, teams can better determine what is resonating with employees and where benefits can be cut back or where they should be ramped up.
2. Put down the brochure and think digital engagement
Employee education is another area of benefits that can often perplex companies. According to a recent survey from Aflac, half of employees only spend 30 minutes or less making benefit selections during the open enrollment period each year. This means employers have a short window of time to educate employees and make sure they are armed with the right information to feel confident in their benefits selection.
To do this effectively, HR needs to move past flat communication like brochures, handouts and lengthy employee packets and look for ways to meet employees where they live — online. By testing out innovations that create a rich experience, while still being simple and intuitive, employers can grab the attention of their workforce and make sure key information is communicated. For example, exploring opportunities to create cross-device experiences for employees so they can interact on-the-go, including augmented reality applications or digital interactive magazines. Additionally, for large corporations, hosting a virtual benefits fair can provide a forum for employees to ask questions in a dynamic setting.
3. Embrace the next-generation of benefits
As organizations become more savvy and nimble, personalization will have a huge impact in encouraging employee engagement and driving satisfaction among today’s increasingly diverse workforce. We have already started to see some companies embrace this new approach to benefits, adding out-of-the-box items to normal offerings — from debt consolidation services and wearable health tracking technology to genome testing and wedding concierge services.
The fact is, the days of “status-quo” benefits are gone, and employees today want benefit options that match their current life circumstances. To best engage employees, organizations need to be proactive in evaluating benefits regularly and using analytics to track usage, identify opportunities to implement digital communication elements and look for ways to introduce new benefits to meet the needs of their employee base. By following these steps, organizations can gain a competitive edge when it comes to attracting and retaining top talent.
See the original article Here.
Source:
Bruce C. (2017 March 10). Why employers should rethink their benefits strategies [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/3-steps-employers-can-take-to-rethink-benefits-strategy?feed=00000152-1377-d1cc-a5fa-7fff0c920000
How are your retirement health care savings stacking up?
Are you properly investing in your health saving account? Take a look at the this article from Benefits Pro about the importance of saving money for your healthcare by Reese Feuerman
For all ages, it's imperative to balance near-term and long-term savings goals, but the makeup of those savings goals has changed dramatically over the past 10 years.
With the continued rise in health care costs, and increased cost sharing between employers and employees, more employees and employers have been migrating to consumer-driven health care (CDH) to provide lower-cost alternatives.
With the increased adoption in these plans for employee cost savings purposes, employers have likewise realized similar cost savings to their bottom line. But what role does CDH play in the long term?
The Greatest Generation was able to rely on their pensions, Social Security, Medicaid, and the like as a means to support them in retirement for both medical and living expenses. However, as the Baby Boomers continue their journey towards retirement, reliance upon future proof retirement funds are fading into the sunset for coming generations. According to a 2015 study from the Government Accountability Office (GAO), 29% of American’s 55 and older do not have money set aside in a pension plan or alternative retirement plan.
To make matters worse, some experts are forecasting Social Security funding will be depleted by 2034, leaving even more retirees potentially without a plan. As such, Generation X and beyond must look for more creatives measures for savings to make up the difference.
In 1978, 401(k) plans were introduced to provide the workforce with a secondary means for retirement savings while also providing significant tax benefits. However, even when actively funded, with rising health care costs and a depleted Social Security system—the solution this workforce has paid into for their entire career—will not be enough.
According to Healthview Services, the average retiree couple will spend $288,000 for just health care expenses during retirement. This sum could easily consume one-third of total retiree savings. This is a contributing factor to the rise and rapid adoption of tax-advantage health accounts to supplement retirement savings. Introduced to the market in 2003, Health Savings Accounts (HSA) have provided employees with an option to set aside pre-tax funds to either cover current year health care expenses, like the familiar Flexible Spending Account (FSA), or carry over the funds year-over-year to pay for medical expenses later or during retirement. The pretax money employees are able to set aside in these accounts to cover health care expenses, will over time, be on par with retirement savings contributions, such as a 401(k) and 403(b), because of increasing costs and triple-tax savings.
It is important for consumers to understand these retirement options and how they could be leveraged for greater financial wealth. As a result, the Health Care Stack, an analysis authored by ConnectYourCare, acts as a life savings model and illustrates the amount of pretax money consumers can contribute for both their lifestyle and health expenses in retirement.
For illustrative purposes, according to current IRS guidelines, the average American under the age of 50 could set aside up to $24,750 each year pre-tax for retirement to cover their health care and living expenses. In this example, if a worker in his or her 30s starts to set aside the maximum contributions (based on IRS guidelines) for HSA contributions, assuming a rate of return of 3%, they would have $330,000 saved in their HSA to cover health care expenses once they reach the retirement age of 65. This number could be even greater if President Trump’s administration passes any number of proposed bills to increase the HSA contribution limits to match the maximum out-of-pocket expenses included in high deductible health plans. This allocation would not only cover average medical expenses, but also provide a triple-tax advantage for consumers from now through retirement.
In addition to the long-term retirement goals, the yearly pre-tax savings may be even greater if notional accounts are factored in, with approved IRS limits of a $2,600 per year maximum for Flexible Spending Accounts, $5,000 per year maximum for Dependent Care FSA, and $6,120 per year maximum for commuter plans. This equals $38,470 (or $44,820 if HSA contributions increase) of pre-tax contributions that consumers could save by offsetting the tax burden and could invest towards retirement.
For those consumers over the age of 50, the savings potential is even greater as they can contribute to a post retirement catch-up for their 401K plans equaling a total of $24,000, plus they may take advantage of the $6,750 HSA savings, as well as the additional $1,000 catch up. If certain proposed bills are passed, the increase could be $38,100 a year that they could set aside, in pre-tax assets, for retirement.
Not only will an individual’s expenses be covered, but there are other benefits brought forth by proper planning, including the potential to reach ones retirement savings goals early. Let’s say that after meeting with a licensed financial investor it was determined that an individual needed $1.8 million in order to retire, and according to national averages, close to $288,000 to cover health care costs.
Given the proper investment strategy around contributions to both retirement and HSA plans, an individual could - theoretically -save enough to meet their retirement investment needs by the age of 60 for both lifestyle and health care expense coverage, if they started making careful investments in their 20s (assuming the worker is making $50,000 per year with a 3% annual increase).
In comparison, under current proposals, which include the increased HSA limits, retirement savings could be achieved even earlier with the coverage threshold being at 57 for the average worker. This is a tremendous opportunity to transform retirement investment programs for all American workers who would otherwise be left on their own. Talk about the American dream!
While there is not a one-size fits all strategy, it is important for everyone to understand their options and see how these pretax accounts outlined in the Health Care Stack play an important consideration in ones future retirement planning.
Taking the time now to fully understand tax-favored benefit accounts will provide him or her with the appropriate coverage to enjoy life well into their golden years. Retirement is just around the corner, are you ready?
See the original article Here.
Source:
Feuerman (2017 March 02). How are your retirement health care savings stacking up?[Web blog post]. Retrieved from address https://www.benefitspro.com/2017/03/02/how-are-your-retirement-health-care-savings-stacki?ref=hp-in-depth
Two-thirds of Americans aren’t putting money in their 401(k)
Did you know only about a third of Americans are putting money away into their retirement accounts? Check out this interesting article from Employee Benefits Advisors about some of the statics of Americans 401(k) savings by Ben Steverman.
(Bloomberg) – Americans aren’t saving enough for retirement.
True, this has been a refrain for longer than many can remember. But now some disturbing numbers show exactly how bad it’s gotten. Two-thirds of all Americans don’t contribute anything to a 401(k) or other retirement account available through their employer.
Millions aren’t saving on the job because they either don’t have access to a workplace retirement plan or they do but aren’t putting money in it. Many just can’t spare the cash, but a new analysis shows there are other reasons, too.
Until now, the exact size of the problem has been unclear. Surveys can be unreliable: Small businesses are difficult to assess, and many workers just don’t know what plan options they have, especially if employers aren’t making much effort to sign them up. Information on a 401(k) may be part of a stack of paper handed out on their first day, that they don’t read or understand, and ultimately set aside and never think about again.
Now, U.S. Census Bureau researchers have come up with estimates that rely on tax data, which should be more reliable than surveys. Their conclusion: Only about a third of workers are saving in a 401(k) or similar tax-deferred retirement plan. Also, the gap is far wider than expected between the number of employers offering retirement plans, and the number of workers saving in them.
Only 14% of employers offer plans
Census researchers Michael Gideon and Joshua Mitchell analyzed W-2 tax records from 2012 to identify 6.2 million unique employers and 155 million individual workers, who held 219 million distinct jobs. This data produced estimates starkly different from previous surveys.
For example, previous estimates suggested more than 40% of private-sector employers sponsored a retirement plan. Tax records uncovered a much bigger pool of small businesses, showing that, overall, just 14% of all employers offer a 401(k) or other defined contribution plan to their workers.
Bigger companies are the likeliest to offer 401(k) plans, and since they employ more people than small firms, skew the overall number of U.S. workers who have the option. Gideon and Mitchell estimate 79% of Americans work at places that sponsor a 401(k)-style plan. The good news is that’s more than 20 points higher than previous estimates. The bad news is that just 41% of workers at those employers are making contributions to such a plan—more than 20 points lower than previous estimates.
The combined result of those two numbers is that just 32% of American workers are saving anything in a workplace retirement account. Four out of five workers are employed by companies that offer a 401(k) or similar plan, but most workers aren’t using them—either because they’re not eligible or because they aren’t signing up.
Lawmakers have proposed a variety of ways to get more people to save. Several states are experimenting with strategies to get every worker signed up for a retirement account. But they face serious pushback from the Republican-controlled Congress and the financial industry.
The demise of the pension
Census researchers are still studying the tax data, cross-referencing it with other databases to get a fuller picture of how Americans are saving. For example, researchers are using retirement plan filing documents to get a better sense of how many workers are still covered by traditional pensions, also known as defined benefit plans. According to a Pew Charitable Trusts analysis of survey data released Feb. 15, only 10% of workers over age 22 have a traditional pension. Just 6% of millennials have a pension while 13% of baby boomers do.
Not surprisingly, the Census data suggest well-paid workers find it easier to save than the lowest-paid. But income isn’t the only factor. Eligibility is also a major issue for part-time workers and people who change jobs frequently. Companies often require employees to work for a certain amount of time before they can sign up for a 401(k), and employers aren’t required to allow part-time workers into a plan until they’ve worked 1,000 hours during the previous year.
Another problem made clear by the new report is that many workers simply don’t know their company 401(k) exists. Workers also might never get around to filling out the paperwork, or could be intimidated and confused by the need to make investment decisions. Companies can help solve all those problem by automatically signing up eligible workers, and requiring them to opt out if they don’t want to participate. Doing so has been proven to boost enrollment, but momentum has now stalled for automatic 401(k) features.
House moves to block auto-enrollment
California, Oregon, Illinois, Maryland, and Connecticut have started programs designed to encourage workers to save. Employers in those states would be required to either offer a retirement plan, or automatically enroll their workers in a state-sponsored individual retirement account. The states had the blessing of the Obama administration, which issued rules allowing states and even large cities to create portable retirement accounts if they want.
On Feb. 15, however, the U.S. House of Representatives voted to rescind those rules. Echoing the arguments of the financial industry, Republicans argued state auto-enrollment plans constitute unfair competition to the financial industry. If the Republican-controlled U.S. Senate and President Donald Trump also sign off, any state and city auto-IRA plans would be placed in jeopardy.
Whatever the outcome, any effort to get workers to save for retirement faces a daunting challenge: Can Americans spare the money? Student debt and auto loans are at record levels, according to Federal Reserve data released Feb. 16, and overall consumer debt is rising at the fastest pace in three years.
Retirement is an important goal, but many Americans seem to have more pressing financial concerns.
See the original article Here.
Source:
Steverman B. (2017 February 21). Two-thirds of americans aren't putting money in their 401(k) [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/two-thirds-of-americans-arent-putting-money-in-their-401-k?feed=00000152-1377-d1cc-a5fa-7fff0c920000
Employers adding financial well-being tools for preretirees
Take a peek at this interesting article from Benefits Pro, about the man tools and services employers are starting to offer to pre-retirees by Marlene Y. Satter,
As their employee base ages closer to retirement, employers are adding tools to help those older employees better prepare for the big day.
That’s according to Aon Hewitt’s “2017 Hot Topics in Retirement and Financial Wellbeing” survey, which found that employers are taking action to improve employee benefits and help workers plan for a secure financial footing, not just now but when they retire.
Not only are employers focusing on enhancing both accumulation and decumulation phases for defined contribution plan participants, they’re taking a range of steps to do so—from improved education to encouraging higher savings rates.
Just 15 percent of respondents are comfortable with the average savings rate in their plan; among the rest, 62 percent are very likely to act on increasing that savings level during 2017, whether by increasing defaults, changing contribution escalation provisions, or sending targeted communications to participants.
And only 10 percent of employers are satisfied with employees’ knowledge about how much constitutes an adequate amount of retirement savings, and nearly all dissatisfied employers (87 percent) are likely to take some action this year to help workers plan to reach retirement goals.
In addition, more employers are providing options for participants to convert their balances into retirement income. Currently just over half of employers (51 percent) allow individuals to receive automatic payments from the plan over an extended period of time.
They’re also derisking through various means, whether by adopting asset portfolios that match the characteristics of the plan’s liabilities (currently 40 percent of employers use this strategy, but the prevalence is expected to grow to more than 50 percent by year end), considering the purchase of annuities for at least some participants (28 percent are considering this action) or planning to offer a lump-sum window to terminated vested participants (32 percent are in this camp).
Why are employers suddenly so interested in how well employees are financially prepared for retirement?
According to Rob Austin, director of retirement research at Aon Hewitt, not only do employees not really understand how to convert a lump sum retirement plan balance into retirement income that they can live on, and employers are also worried that employees will mishandle that lump sum when the time comes and end up broke.
So some employers are tackling the issue by folding in more information about 401(k) plans with the annual enrollment process, in an effort to get employees to think more holistically about their benefits packages.
They're also encouraging them to consider increasing contributions to their retirement plan while they’re already enmeshed in other enrollments.
See the original article Here.
Source:
Satter M. (2017 February 13). Employers adding financial well-being tools for preretirees [Web blog post]. Retrieved from address https://www.benefitspro.com/2017/02/13/employers-adding-financial-well-being-tools-for-pr?ref=hp-top-stories
How to encourage increased investment in financial well-being
Disappointed that your employees are not putting enough into your company's financial programs. Take a look at this article from Employee Benefits News for some helpful tips to help improve your employees' spending on financial well-being by Cort Olsen,
As few as 15% of employers say they are satisfied with their workers’ current savings rate in programs such as 401k(s), according to a new report from Aon Hewitt. In response, employers are increasingly focused on increasing savings rates and looking to expand financial well-being programs.
More workplace wellness programs are including a financial component, in which employers aim to help employees with financial issues from budgeting to paying down debt to saving for retirement.
Aon Hewitt surveyed more than 250 U.S. employers representing nearly 9 million workers to determine their priorities and likely changes when it comes to retirement benefits. According to the report, employers plan to emphasize retirement readiness, focusing on financial well-being and refining automation as they aim to raise 401(k) savings rates for 2017.
Emphasizing retirement readiness
Nearly all employers, 90%, are concerned with their employees’ level of understanding about how much they need to save to achieve an adequate retirement savings. Those employers who said they were not satisfied with investment levels in past years, 87%, say they plan to take action this year to help workers reach their retirement goals.
“Employers are making retirement readiness one of the important parts of their financial wellbeing strategy by offering tools and modelers to help workers understand, realistically, how much they’re likely to need in order to retire,” says Rob Austin, director of retirement research at Aon Hewitt. “Some of these tools take it a step further and provide education on what specific actions workers can take to help close the savings gap and can help workers understand that even small changes, such as increasing 401(k) contributions by just two percentage points, can impact their long-term savings outlook.”
Focusing on financial well-being
While financial wellness has been a growing trend among employers recently, 60% of employers say its importance has increased over the past two years. This year, 92% of employers are likely to focus on the financial well-being of workers in a way that extends beyond retirement such as help with managing student loan debt, day-to-day budgeting and even physical and emotional wellbeing.
Currently, 58% of employers have a tool available that covers at least one aspect of financial wellness, but by the end of 2017, that percentage is expected to reach 84%, according to the Aon Hewitt report.
“Financial wellbeing programs have moved from being something that few leading-edge companies were offering to a more mainstream strategy,” Austin says. “Employers realize that offering programs that address the overall wellbeing of their workers can solve for myriad challenges that impact people’s work lives and productivity, including their physical and emotional health, financial stressors and long-term retirement savings.”
The lessons learned from automatic enrollment are being utilized to increase savings rates. In a separate Aon Hewitt report, more than half of all employees under plans with automatic enrollment default had at or above the company match threshold. Employers are also adding contribution escalation features and enrolling workers who may not have been previously enrolled in the 401(k) plan.
“Employers realize that automatic 401(k) features can be very effective when it comes to increasing participation in the plan,” Austin says. “Now they are taking an automation 2.0 approach to make it easier for workers to save more and invest better.”
See the original article Here.
Source:
Olsen C. (2017 February 06). How to encourage increased investment in financial well-being [Web blog post]. Retrieved from address https://www.benefitnews.com/news/how-to-encourage-increased-investment-in-financial-well-being?brief=00000152-14a7-d1cc-a5fa-7cffccf000
10 tips for next generation benefits
Great article from Benefits Pro about ten tips to help improve your benefits for the next generation by Erin Moriarty-Siler,
If brokers and their clients want to continue to attract and, more importantly, retain millennials and other generations entering the workforce, they'll need to start rethinking benefits packages.
As part of our marketing and sales tips series, we asked our audience for their thoughts on the next generation and their benefits needs.
Here are the 10 tips we liked best.
1. Show appreciation
“Even if you don't have the time and resources to roll out the red carpet each time an employee joins your team, they should feel as if you do. Even something as simple as a team lunch to welcome them and a functioning computer can go a long way toward making a new employee feel valued and at home.” Sanjay Sathe, president & CEO, RiseSmart.
2. Real world benefits
“It's important for benefits professionals and brokers to transform their organizations’ benefits offerings to align better with what both the individual and the generational millennials value — benefits that reflect the real world in which all generations in today's workforce think about the interconnection between their careers, employers, and personal lives.” Amy Christofis, client account executive, Connecture, Inc.
3. A millennial world
“One can no longer think of millennials as the ‘kids in the office.’ They are the office.” Eric Gulko, vice president, Summit Financial Corporation
4. New normal
Millennials are no longer just data and descriptors in a PowerPoint slideshow about job recruitment. They are now the majority, and how they do things will soon be the norm. It's important to consider these implications.
5. Innovation
“If we want to build organization that can innovate time and again, we must recast our understanding of what leadership is about. Leading innovation is about creating the space where people are willing and able to do the hard work of innovative problem solving.” Linda Hill, professor of business administration, Harvard Business School
6. Don't make assumptions
“Just because millennials are comfortable using the internet for research doesn't mean they don't also like a personal touch. Employers need to be wary of relying on only one communication vehicle to reach millennials. Sixty percent of millennials say they would be willing to discuss their benefits options with someone face to face or over the phone.” Ken Meier, vice president, Aflac Northeast Territory
7. The power of praise
“The prevailing joke is that millennials are ‘the participation trophy generation,’ having always been praised just for showing up, not necessarily winning. Turn that negative perception into a positive by realizing that providing constructive, encouraging feedback when it's earned motivates this generation to strive for even more successes.” Kristen Beckman, senior editor, LifeHealthPro.com
8. Embrace diversity
“For the first time, employers are likely to have up to five generations working together — matures, baby boomers, Generation X, millennials (Generation Y) and now Generation Z. From their workstyles to their lifestyles, each generation is unique.” Bruce Hentschel, leads strategy development, specialty benefits division, Principal Financial Group
9. Non-traditional needs
“Millennials have moved the needle in terms of work-life balance. They don't expect to sit in their cubicles from 9-5. They want flexibility in their work location and hours. However, on the flip side of that, they are more connected to their work than generations before, often logging ‘non-traditional’ work hours that better fit into their lives.” Amy Christofis, client account executive at Connecture, Inc.
10. Listen in
“If there's one thing the Trump victory teaches us, it's to listen to the silence in others. Millennials may be giving the financial industry the silent treatment, but that doesn't mean they don't want to talk.” Christopher Carosa, CTFA, chief contributing editor,FiduciaryNews.com
See the original article Here.
Source:
Moriarty-Siler E. (2017 February 03). 10 tips for next generation benefits [Web blog post]. Retrieved from address https://www.benefitspro.com/2017/02/03/10-tips-for-next-generation-benefits?page_all=1
Target employee financial needs by finding the right technology
Are you looking for new ways to help improve your employees' financial needs? Take a look at this interesting article from Employee Benefits Advisors about how the use of technology can improve your employees' financial needs by Mark Singer
We have seen how a large percentage of the American workforce has an inadequate degree of financial literacy, and how the lack of basic financial knowledge causes personal problems and workplace stress. We have also seen the importance of financial education and how raising employee literacy directly benefits the bottom lines of companies.
The financial health of employees can vary greatly between companies, as can employee numbers. Work schedules and available facilities are other issues of variance. There is also the interest factor to address. Employees must find programs interesting and beneficial, or they will not attend or glean maximum results. Financial wellness programs that may be beneficial and successful for one company may be burdensome and unsuccessful for another. To meet pressing personal financial problems effectively, cutting-edge technologies need to be applied that both address immediate employee issues and limit company expense.
There are numerous new technologies that can be utilized in a mix-and-match fashion that successfully target employee financial needs. This age of the World Wide Web brings a host of financial education tools directly to the audience. Informational videos, virtual learning programs, webinars, training portals and other virtual solutions are easily accessible over the Internet and most are quite user-friendly. This mode of education is significant. For example, 84% of respondents to a survey conducted by Hewlett-Packard and the National Association for Community College Entrepreneurship said that e-tools were valuable. The study went on to show that modalities containing some degree of online training were preferred by 56% of respondents.
Gaming and data
One form of online educational technology that is gaining momentum as well as results is known as game-based learning. This method of learning is particularly popular with the millennial generation that has grown up with an ever-increasing variety of online gaming. In 2008, roughly 170 million Americans engaged in video and computer games that compel players to acquire skills necessary to achieve specific tasks. It has been found that well-designed learning programs that utilize a gaming sequence improve target learning goals. Such games teach basic financial lessons in a fun and innovative way that requires sharpened financial skills to progress through the programs.
Technological tools not only benefit those that are utilizing them directly, but they also assist the entire community through the collection of key data. Many of the mentioned tools embed surveys within programs or collect other data such as age, income and location, which can be used to create even better educational materials or better target groups in need of specialized services.
Employers need to realize that they benefit when they utilize these new technologies in their financial wellness programs, since these tools assist workers in taking control of their financial lives. Thereby reducing their stress levels, which in turn leads to happier and more productive employees. Sometimes it is best to meet the employees where they are, with tools that are easy and fun to use.
See the original article Here.
Source:
Singer M. (2017 February 02). Target employee financial needs by finding the right technology [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/target-employee-financial-needs-by-finding-the-right-technology
Only 1 in 3 employees actually understands how their 401(k) works
Do all of your employees understand how their 401(k) works? If not check out this article from HR Morning on the statistics of about 1 in 3 employees that do not understand their 401 (k) by Jared Bilski,
When it comes to common financial vehicles like 401(k) plans, term life insurance, Roth IRAs and 529 college savings plans, most workers could use some education on the finer points.
In fact, according to a recent study by The Guardian Life Insurance Company of American, one-third or less of employees said they had a solid understanding of the most common financial products.
Problem areas
Here is the specific breakdown from the Guardian Life study on the percentage of worker that said they have a solid understanding of various financial products:
- 401(k)s and other workplace retirement plans (just 32% of workers said they had a solid understanding)
- IRAs apart from Roth IRAs (27%)
- Individual stocks and bonds (26%)
- Mutual funds (25%)
- Pensions (25%)
- Roth IRAs (24%)
- Term life insurance (23%)
- Separately managed accounts (23%)
- Disability insurance (23%)
- 529 college savings plans (23%)
- Whole life insurance (22%)
- Business insurance, such as key person insurance or buy/sell agreements (20%)
- Annuities (19%)
- Universal life insurance (19%), and
- Variable universal life insurance (18%).
Education vs. no education
One of the best ways to help workers garner a better understanding of their finances — and the financial products available to them — is through one-on-one education.
Consider this example:
The Principal Group compared the saving habits and financial acumen of workers who attended a one-on-one session the organization offered one year to those who didn’t.
What it found: Contribution rates for those who attended the session were 9% higher than those who didn’t. Also, 19% of the workers who received education opted to automatically bump up their retirement plan increases with pay increases, compared to just 2% of other employees.
Also, 92% of the employees who were enrolled in Principal’s education program agreed to take a number of positive financial steps, and 80% of those workers followed through on those steps.
See the original article Here.
Source:
Bilski J. (2017 January 27). Only 1 in 3 employees actually understands how their 401(k) works [Web blog post]. Retrieved from address https://www.hrmorning.com/only-1-in-3-employees-actually-understands-how-their-401k-works/
3 Financial Risks That Retirees Underestimate
Are you worried about the risks associated with retirement? If so check out this article from Kiplinger about some of the risks associated with retirement that retirees underestimate by Christopher Scalese
When you think of risk in retirement, what comes to mind? For many, the various risks associated with the stock market may be the first. From asset allocation risk (avoiding keeping all of your eggs in one basket) to sequence-of-return risk (the risk of taking out income when the market is down), these factors become increasingly important once your paychecks stop and you begin drawing from your investments for retirement income.
However, these are only the tip of the iceberg when it comes to key risks that should be considered for retirement planning in today's economy. Here are three areas I commonly see retirees and pre-retirees forgetting to consider:
1. Portfolio Failure Risk
How long can you live off of income from your investments? Is it likely that your investments can provide an income stream you won't outlive? There are many theories, such as the ever-popular 4% rule, which suggests that, if you maintain a portfolio consisting of 60% bonds and 40% equities, you can take 4% of your total portfolio each year. However, studies in recent years have shown this method to have about a 50% failure rate based on today's low-interest rates and market volatility.
Another withdrawal method is guessing how long you'll live and dividing your savings by 20 to 30 years—but what happens if you live 31 years?
If you do not have a written income plan for how to strategically withdraw from your accounts over the duration of your retirement, this may be a significant risk to consider.
2. Unexpected Financial Responsibility Risk
Life is full of surprises, and retirement is no different. Today's retirees are known as the "sandwich generation" with financial pressures coming from all sides—often having to provide for grown children and aging parents at the same time.
Additionally, there are difficult but significant financial planning considerations for the future loss of a spouse. You can expect to lose a Social Security payment and potentially see changes to a pension. Simultaneously, tax brackets will shrink when going from married to single, taking a larger piece of your already-reduced income.
Having a proactive, flexible financial strategy can be essential in helping you adapt to your many changing needs throughout the course of your retirement.
3. Health Care Risk
Beyond the considerations for inflation on daily purchasing power in retirement, rising costs of health care, particularly as Americans continue living longer, require explicit planning to avoid a physically disabling event from becoming a financial concern. From Medigap options to long-term care and hybrid insurance policies, considering insurance coverage for perhaps one of the most significant expenses in retirement may be a pivotal point in your retirement planning.
While these obstacles may seem daunting, identifying and understanding the concerns unique to your retirement goals should be the first step to help overcome them.
See the original article Here.
Source:
Scalese C. (2017 January). 3 financial risks that retirees underestimate [Web blog post]. Retrieved from address https://www.kiplinger.com/article/retirement/T037-C032-S014-3-financial-risks-that-retirees-underestimate.html