Just imagine the return for smaller employees. For a 50,000-employee company, improving retirement preparedness could lead to a savings of $65 million or more per year.
It’s one of a number of findings from new research from Liz Davidson and crew at Financial Finesse’s Financial Wellness Think Tank.
It focused on quantifying the improvements which generate ROI for an employer by reducing the costs of delayed retirements.
According to the report, repeated engagement with financial wellness programs that improve average workforce financial health from a 4 to a 6 (on a 10-point scale) increases employee retirement plan contribution rates by a factor of 38 percent from original rates.
It means the projected average workforce age at which an employee could retire and replace 80% of their income drops 2 years, from 68.95 years to 66.96 years.
When applied across a total workforce of 50,000 employees, that reduction in average retirement age could generate powerful employer savings of over $65 million, according to Financial Finesse.
“Reductions in retirement age occur across all career stages, with employees under 35 seeing the largest reduction (2.67 years) and older employees still seeing a reduction of one year. This suggests that comprehensive financial wellness programs which repeatedly engage employees can be effective in mitigating current costs of delayed retirement, as well as future costs.”
Even modest improvements in employee financial wellness generate meaningful savings, it argues.
“An improvement of the average workforce financial wellness from 4 to 5 (on a 10-point scale) leads to a 17.85 percent increase in retirement plan contribution rates, reducing the average projected retirement age by one year. This could generate over $33 million in savings from reducing delayed retirements.”
“Programs that include financial coaching help employees break through blocks to retirement savings by tackling debt and student loans, managing cash flow and navigating important life goals like marriage, parenthood and home ownership,” Financial Wellness Think Tank director Greg Ward said in a statement. “Results are cumulative and interact with each other, so the longer a company has a holistic financial wellness benefit in place, the more workforce financial wellness shifts.”