The simple act of running a retirement projection may be the single most important step employees can take to reach their 401k financial goals.
So says Financial Finesse, the financial coaching firm for employees, in its 2016 Annual Year in Review report, released Wednesday. CEO Liz Davidson and crew found that as a result of this action, more employees discovered they were on track to retire.
Per the report, nearly six in 10 employees that made up the 14 percentage point increase in employees who reported having run a retirement projection discovered they were on track for retirement, while about four in 10 employees learned they actually were not on track to retire.
As more employees run their projections, those who are not on track may have time to make adjustments in order to avoid delayed retirement. This could benefit employers by reducing bottom line costs associated with delayed retirement, which Financial Finesse, the Society of Actuaries and other industry experts estimate to range between $10,000 and $50,000 per employee for every year they delay retirement due to financial reasons.
Average financial wellness scores improved for American workers to 5.4 (on a 10-point scale), up from 4.7 in 2015.
The improvement was largely due to an increase in repeat users of financial wellness programs, who as a group averaged 5.9 in 2016. Repeat users showed improvement of nearly 23 percent in their average Financial Wellness Score from their initial assessment to their most recent assessment.
Those who participated in workplace financial wellness programs on a regular basis were 12 percentage points more likely to have run a retirement projection than new users (58 percent versus 46 percent).
Gregory Ward, director of Financial Finesse’s Financial Wellness Think Tank, says repeat usage of workplace financial wellness programs is being driven by growing interest in benefits that help employees improve their financial situations and well-being.
He notes that employers offering these programs are doing more to increase awareness and participation. The firm identified significant increases in employees using these programs on a regular basis last year–with repeat users comprising 29 percent of total users in 2016, up from 16 percent in 2015, 14 percent in 2014 and 6 percent in 2013.