Employers can help each generation with their financial well-being

Struggling to support 4 generations with their financial well-being? Here's where to start

April 15, 2024 2:38 PM

Woman holding stack of money, one hand on chin, thinking

When employees are financially insecure, everything from mental wellness to work productivity can suffer. While benefits around saving and retirement can help everyone, employers should also recognize that each generation may need more specific support.

Support needs to start with education: The average American loses more than $1,500 per year due to lack of financial understanding, and just over half are considered financially literate, according to a report from research company MarketWatch. When it comes to saving and investing, their research found more than 40% of people — and over half of Gen Z — are not familiar with Roth IRA's, money market accounts and high-yield savings accounts, and 70% of those who have access to a 401(k) don't use this benefit.

"Everybody's at a different starting point, so it's really important to learn the ways in which financial illiteracy can hurt you," says David Straughan, a financial expert with MarketWatch Guides. "That can be everything from getting loans that have higher interest rates than you need to be paying, or paying for overdrafts and late payments which can impact your credit."

Once employees understand their financial challenges, they can zone in on how to solve them. Ideally, an employer will offer financial tools, education and experts to facilitate this work, no matter the circumstance, Straughan says.

For example, while Gen Z needs entry-level education around budgeting and setting up their 401(k), Gen X and boomers will need more specific guidance around converting their investments to more retirement-ready assets. Understanding the nuances of each group will also reduce any stigma employees may have around discussing money at work.

"There's a tendency to have shame and moralism around money, and when you're not doing well financially you feel like you're doing something wrong," Straughan says. "A lot of times that's not the case; it's just hard for people right now. Empathy and clarity [from employers] are key."

It's important for employers to make ongoing communication a part of their financial benefits strategy, reminding employees what they have at their disposal and paving the way for money conversations to become normalized. To meet employees where they are financially, here are a few things to add to your financial wellness arsenal that will benefit each generation in the most impactful way.

Gen Z: Budgeting 101

For those just starting out or still early-on in their careers, encouraging a jumpstart on savings can help them achieve financial goals much sooner and plan for the far-off future simultaneously.

"The big thing with people who are younger is understanding compound interest — even if you're just saving $10 out of every paycheck, it adds up and sets the stage for later in life," Straughan says. "For people who are young and who are new to having a salary, budgeting is the foundation of smart decisions."

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Millennials: Debt management matters

Between high amounts of debt and ongoing expensive obligations such as caregiving and homeownership, this generation can use a well-rounded financial benefits package.

"Millennials went through a pretty rough economic entry into adulthood and a lot of them are probably in recovery [financially], so debt management is helpful," Straughan says. "They're middle aged, mid-career, and while some don't know how to create a budget, others have complex investment questions."

For those caring for others, especially aging parents, Straughan emphasizes the relief that can come from legal and tax education resources.

"The most useful thing might be the resources available to you for things like tax benefits, like if a parent qualifies as a dependent," he says. "If you're in that situation, personal money management and a better understanding of the types of relief programs that are out there are some of the things that can help you financially."

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Gen X: Transition to retirement

From shifting financial assets to redesigning their budget, the Gen X workforce population will need as much support as possible as they transition to retired life.

"Gen Xers are beginning to wrap up their careers and head into retirement, which means that providing resources for retirement planning is one of the best things employers can do," says Straughan. "For many, that could mean beginning to convert long-term investments into more flexible and accessible accounts like high-yield savings accounts or shorter-term CDs."

Encouraging employees in this age group to think about how their expenses will change post-retirement will help set them up for future financial success. While work-related cost categories such as gas may go down, for example, other types of spending, such as medical and leisure costs, may go up, says Straughan.

"People may not fully understand what types of expenses they will encounter when they reach retirement," he says. "How will your Gen X employees spend their time once work isn't taking up their weekdays? Budgeting isn't just for necessities, and retirement is meant to be enjoyed. If your Gen Xers aren't used to having lots of time off, providing information about how to budget for entertainment, travel and other 'fun stuff' can also be incredibly valuable."

Baby boomers: Get decumulation right

Whether still working full time or coming out of retirement to return to the workforce in some capacity, this age group can still benefit from their employer's financial offerings.

"Baby boomers especially have had really consistent career trajectories, and a lot of times you've built up all this money, but how do you get it out?" Straughan says. "[Education is] going to be around taxes with them. How do they get money out in the way that's going to cost the least, and how to manage retirement funds correctly? If you have adult children, how much can you give them without having to pay taxes? It's much more about money going out at that point in life."