What financial wellness benefits do employees need?

September 17, 2024 12:00 PM

Employers seeking to retain experienced professionals across the organization are launching new benefit packages to meet the nuanced needs of current and future generations.

Technology has been a driving force for change across numerous industries and workplaces, helping streamline procedures ranging from talent sourcing to benefit management and even health care choices.

"By adopting a distribution model similar to online shopping, benefit designers and administrators are reimagining the types of benefits offered to employees and how they are communicated," Suresh Moorthy, digital leader for Mercer Marsh Benefits, said.

But even with the addition of new programs, many Americans are still struggling with psychological and emotional challenges that push them to the breaking point.

Data from mental health services provider ComPsych found that mental health-related absences jumped by 300% between 2017 and 2023. By 2024, one in every ten absences were for mental health reasons.

Dr. Jennifer Birdsall, licensed clinical psychologist and clinical director at ComPsych, told EBN's Deanna Cuadra that external chronic stressors like "the pandemic, civil unrest and community violence" have combined with personal stressors such as caregiving to contribute "to those feelings of [being] burned out and overwhelmed."

"We should train managers on topics like how to spot employees who are struggling, how to have supportive conversations about mental health and how to make recommendations to a team member about how their benefits can help them," Dr. Birdsall said. "We want managers who can support a positive mental health culture."

The current election cycle has posed its fair share of challenges to the benefits landscape, particularly where abortion, Medicare and immigration are concerned.

All of these changes have employers paying closer attention to their workers for answers on what benefits they need to not just stay afloat, but thrive.

Read on to learn more about how employers are launching new benefits to increase the financial wellbeing of their staff.

What are the best benefits to support employees’ financial well-being?

According to a recent study conducted by the software firm Ceridian, roughly 82% of employees are consistently worrying about their personal finances while at work — amounting to more than $660 billion in lost productivity. Similar research published by PwC found that 49% of workers struggle to meet household expenses like bills.

"This year has been particularly tough for folks," Ana Mahony, CEO of financial wellness platform Addition Wealth, told EBN's Paola Peralta. "People are not only navigating household debt, which has reached an all-time high, but we're also seeing inflation that's gone up, student loan repayments and high credit-card card debt. It continues to be a tough time for Americans in terms of their finances."

For companies seeking to meet these issues head on, employers should consider adding financial wellness platforms, alongside other offerings for staff needs like mental health and family planning.

Read more:

The best benefits employees need to manage their finances in 2024

Are well-intentioned financial wellness benefits actually working?

Between pressing financial concerns like student-loan payments and long-term plans for retirement, 86% of employees say they are stressed about their finances, according to a report from SoFi at Work.

The data goes on to explore how workers are attempting to alleviate immediate financial burdens. Roughly 30% are borrowing money from family and friends, while 23% have liquidated investments. Even more worrying, one in five employees surveyed have tapped their retirement funds.

"When almost all employees say they're stressed about finances, it's time for employers to listen — or risk it negatively impacting their company's bottom line," Michael Bourgeois, vice president and business lead at SoFi, told EBN's Alyssa Place. "HR leaders need to ensure employees understand the long-term tradeoffs and don't lose sight of future financial well-being. It's essential to offer a holistic benefits package designed to meet employees at all stages of life."

Student-loan debt has remained one of the most significant burdens for many, but employees are optimistic about the chance their employers will provide loan repayment benefits or participate in SECURE 2.0's matching program.

Read more:

86% of employees are stressed about money: Why your financial wellness benefits may be failing

How employers can support the financial needs of four different generations

Benefits surrounding topics such as mental health and work have only grown in importance in the last few years, but increasing financial insecurity can quickly erode how effective other programs are. Solving these challenges can mean different things across different age groups.

Data from MarketWatch found that the average American loses more than $1,500 each year from lacking financial education, with just over half qualifying as financially literate.

"Everybody's at a different starting point, so it's really important to learn the ways in which financial illiteracy can hurt you," David Straughan, a financial expert with MarketWatch Guides, told EBN's Lee Hafner. "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."

While the needs of Gen Z and millennial staffers center around budgeting and adequate retirement planning, Gen X and baby boomers need tailored advice on preparing investments for retirement.

Read more:

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

The growing adoption of lifestyle savings accounts

Lifestyle savings accounts, which are specialized accounts provided by employers for a wide variety of professional and personal needs, are becoming increasingly popular among companies aware of the struggles facing employees across the U.S.

A survey conducted by the benefits and advisory firm WTW found that only 7% of companies currently include an LSA in their benefits package, but 35% are planning or considering the addition of an LSA by 2025. Of those that offer or are eyeing LSAs, more than two-thirds said personalization was a key aspect. Fifty-nine percent said talent retention also played a part in the decision.

Sara Taylor, senior director of employee spending accounts at WTW, told EBN's Deanna Cuadra that the versatility of LSAs make them an attractive offering for employees to want to engage with and help employers accommodate a wide range of needs without spinning up numerous programs.

"LSAs could provide a richer experience for employees versus the laundry list where pieces or parts of those programs appeal to a certain population but not a full [workforce]," Taylor said.

Read more:

Why lifestyle savings accounts are an increasingly popular benefit

Health care literacy is tantamount to financial wellness

As health care costs across the U.S. continue to grow, it's vital that employees remain informed about their plans, the coverage provided and the costs incurred throughout. But research conducted in April by Arizent, which published Employee Benefit News, showed there is a significant gap to address.

The report found that when given a quiz on common terms workers would come across when enrolling in a health plan, only 31% of those surveyed managed to score 70% or above. Concepts like co-insurance and HMOs tripped up a significant amount of employees, while most understood deductibles.

"I equate it to financial literacy," Ed Ligonde, partner and market director at brokerage Nava Benefits, told EBN's Deanna Cuadra. "It encompasses your level of understanding of employee benefits, from the insurance plan, to how to access care and then how to navigate it. If you as the employer aren't focusing enough energy and resources into literacy, how are you getting the best ROI?"

Read more:

Why healthcare literacy is key to financial wellness