The COVID-19 crisis has upended the financial picture for millions of Americans, leaving their retirement savings in a precarious state. Even pre-pandemic, many workers were woefully unprepared for retirement. Now, long-term savings has fallen further down the list of financial priorities, leading to stress and anxiety.
Almost half of U.S. households say they have had serious financial problems as a result of the crisis, according to an NPR survey. Sixty-four percent of Americans anticipate retiring broke, according to a survey by GoBankingRates, an online personal finance resource provider.
“Nearly every aspect of the well-being of Americans is being challenged by what we’re experiencing from the pandemic,” Yanela Frias, president of Prudential Retirement, said in a recent media call. “All of this is enormously stressful physically, mentally, emotionally and financially for so many. The pandemic has laid bare the widening gap between the financially secure and insecure in this country.”
To help combat the effects of financial stress on productivity and overall well-being in the workplace, employee benefits that tackle retirement savings can have a positive impact on someone’s economic and emotional life. Incorporating financial literacy into the workplace increases productivity and retention, and financially literate employees are less stressed and more focused, according to the Society for Human Resource Management.
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Fifty-seven percent of organizations offer workers a retirement investment advice program and 36% offer non-retirement related financial advice, according to SHRM. Employers play a critical role in preparing their workers for their workers for retirement.
Harry Dalessio, the head of institutional retirement plan services at Prudential Retirement, shared the three core components Prudential recommends employers implement to help employees be successful: smart plan design, creating an income stream for life and reinforcing and enabling financial wellness.
“There’s a lot of challenges facing organizations right now, but we need to take the time to reassess retirement plans to make sure they are protecting and driving outcomes through the good times and bad,” he says. “First and foremost it all starts with plan design. There’s a few attributes that we believe really drive strong outcomes for plan sponsors. The first would be taking advantage of auto-enrollment and then creating a path for auto-deferral increase as well as defaulting them into a qualified investment account.”
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When it comes to creating an income stream for life, sponsors should think about programs and benefits they can put in place to help employees build a foundation, particularly for those vital years right before and during retirement.
Retirement programs should also pinpoint areas where their savings may be vulnerable, like healthcare.
“Sponsors, advisers and employers are looking at their employees from a much more holistic standpoint,” Dalessio says. “[Maybe] they can’t save in their 401(k) plan because they have student loan debt, or they can’t increase their contribution in the 401(k) plan because they have budget issues. All of that is now coming together in a much more holistic way and the most natural place to deliver that is through the workplace.”
