As the new year cautiously edges out of the starting blocks, there are positive signs on the horizon when it comes to employee wellness programs.
Employer-based financial wellness programs are increasing employee financial confidence and easing money and retirement concerns of Americans, in particular Gen Z, according to a new report from investment powerhouse TIAA. And employers should especially take note of the impact of financial wellness programs, based on key findings in the just-released 2022 TIAA Financial Wellness Survey.
The report found that employees who participate in an employer-sponsored financial wellness program focused on retirement, debt management, education saving, budgeting, managing healthcare costs, investing or a similar topic are twice as likely as other employees to have a high financial wellness score (32% vs. 15% of those either not offered any benefits or offered but did not participate).
The respondents were also are much more confident about their progress on key markers of good retirement planning, such as being able to retire when they want to (54% vs 32%), afford the retirement lifestyle they want (54% vs 29%), and live comfortably in retirement without running out of money (50% vs 29%).
“There are several perceived obstacles that can prevent employees from taking advantage of the employer-sponsored financial wellness programs,” said Snezana Zlatar, Senior Managing Director and Head of Financial Wellness Advice and Innovation at TIAA. “But the key is to provide targeted, ongoing education about the benefits that these kinds of programs can provide.”
Gen Z’s pessimism evident
Gen Z respondents seem to be the most pessimistic, with only 12% of them rating their financial wellness as a 9 or 10 versus 22% of people overall. It’s a trend that also matches a widening gap between the financial stability of women, in comparison to their male counterparts. The younger generation is also more likely to say their financial wellness is worse than where they thought they’d be at their age 10 years ago — and worse than people in their parents’ generation when they were their age.
And their concerns don’t end there. While 60% of Americans report being stressed about their finances, that number leaps to 75% for Gen Z (and 74% of Millennials).
However, Gen Z and company are trying to right the ship with more than half saying that participation in financial wellness programs makes them feel more likely to say they have taken key actions to improve their finances and retirement picture.
The TIAA survey also found that Gen Z especially did not think about their retirement planning when considering their financial wellness. But they are still craving information though with 68% of Gen Z (compared to 57% overall) expressing interest in learning more about effective retirement planning through a financial wellness program.
“It’s hard for employees to focus on their retirement when there are more immediate pressing needs,” noted Zlata. “The most impactful financial wellness programs help address both short-term and long-term goals since they are linked together.”
Employers play pivotal role
Over half of survey respondents agree that employers have a responsibility to help employees improve and maintain their financial wellness. TIAA reports that younger Americans are more likely to believe that employers have a responsibility to help their employees be well mentally, physically, and financially. Yet there is still hesitation with about three in four workers having reservations about using that support because they are likely concerned about hidden fees or not wanting to disclose finances or financial issues to their employer.
“Employer-sponsored financial wellness support is both needed and wanted by employees, especially for workers who might need help the most,” said TIAA’s Zlatar, adding that it is natural for employees to have questions about cost and confidentiality.
More than 60% of employees also say that employers have a responsibility to make sure employees are mentally healthy and emotionally well. It’s data such as this that indicates that employers need to “redouble” their activities on the financial wellness front, according to TIAA.
Pandemic brings financial wellness into focus
TIAA also took a hard look at how the COVID-19 pandemic affected individual’s financial wellness. Among its findings:
- More than half of Americans are now more aware of their overall financial wellness since the pandemic;
- About 30% of Americans prioritize having an emergency fund more now than they did since the pandemic began; and
- Over the course of the pandemic, 37% say their financial wellness increased, 42% say it stayed the same, and 21% noted a decrease.
The pandemic has affected financial wellness for Americans according to Zlatar, but she expects interest in employer financial wellness programs to increase, ushering in a “new era of financial wellness offerings that must be flexible, personalized and easy to understand.”
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
