Different employees prioritize different aspects of their financial well-being based upon their personal situations and financial needs. According to recent research, 38% of workers share the top financial goal of saving for retirement while 27% share a top goal of building an emergency savings fund.
Additionally, unlike older generations, Gen Z and millennial employees are seeking other types of investments, including investing in cryptocurrency, real estate, annuities and small businesses, according to Schwab Retirement Plan Services’ annual survey of 401(k) plan participants. Whether it’s the younger generations or older workers, employees are motivated to make positive change and they’re looking to their organizations for support.
This year, Barrett Scruggs, VP of Employee Financial Well-Being at SoFi at Work, predicts employers will keep up with their individual employees’ goals by offering new and personalized benefits to not only attract but also maintain top talent.
Here’s what he had to say.
What employee benefits do you see taking center stage this year?
BS: We found the top financial benefits employees want their businesses to add, improve, or expand upon are emergency savings fund (64%), retirement matching/401(k) (64%), financial planning tools (62%), budget planning tools (61%), and homeownership assistance (60%). We expect to see these offerings become more widely available this year, especially as employers aim to retain and attract new talent.
In addition to the above benefits, uncertainty around student loans is increasing employee demand for student loan benefits. With guidance on student loan forgiveness and educational assistance programs changing by the day, borrowers will look to their employers to help with student loan repayment and management in the new year. Employers should consider offering educational resources like access to financial advisors or more direct aid such as matching retirement contributions with student loan payments.
There are many uncertainties in the new year. One thing is for sure, however. Employees want their companies to help with more aspects of their lives including financial well-being, mental health, and workplace flexibility. Employers looking to stand out will provide benefits options that meet the individual needs of their employees and promote a culture of overall well-being.
How can employers tailor their offerings to their employees’ personal financial needs or goals?
BS: Tailoring your financial benefits to meet the needs of all employees starts with understanding employees’ needs and the impact of the last year on their lives. Companies can come to this understanding through employee surveys, financial wellness assessments, focus groups with critical talent, and data-driven analysis of current and past benefits offerings. Any of these processes will offer a deeper understanding of your employees’ financial needs and allow companies to pinpoint the offerings that will best serve their talent. From there, companies can ensure they are offering holistic benefits which hit on the needs of employees with different backgrounds, from all life stages, and with varying degrees of financial literacy. For example, say a company finds its workforce is largely made up of Millennial and Gen Z talent who aren’t taking advantage of retirement offerings but would benefit from student loan repayment or homeownership assistance. Knowledge is power, and they can tailor their options accordingly.
What financial benefits can employers offer to improve equity in the workplace?
BS: Employers should ensure their financial benefits attract and serve a diverse workforce and help to address economic inequality throughout every segment of the workforce. Traditionally, financial well-being programs have focused on 401(k) benefits and education programs geared toward long-term savings and retirement. However, it’s become increasingly apparent this approach doesn’t meet all the needs of today’s diverse workforce and the pandemic highlighted the need for short-term, goal-oriented savings options.
Personalized financial benefits that address short- and long-term goals can help companies meet their employees where they’re at in their financial journey. When you offer a range of financial well-being benefits, you give employees the power to choose what will help them the most. Emergency savings accounts, student loan repayment programs (including 401(k) matches for employees paying off student loans), and debt management tools are all great options to hit on the many different needs of a workforce. Established college tuition and retirement savings programs are vital to a holistic financial wellness program.
Why are financial well-being benefits important in our current job market?
BS: We are in an employee-centric job market, with only 3.7% unemployment and over 10 million available jobs, which means employers are continuing to seek ways to boost retention and increase employee satisfaction. On the employee side of things, economic volatility, high inflation, and rising student loan debt have people looking for guidance on how to best manage and optimize their finances in the current environment.
Financial well-being benefits help meet the needs of both employers and employees. Employees can benefit from financial guidance and employer contributions to sources of stress such as student loans or emergency savings funds. Employers can meet the needs of their team and show their top talent they care for their well-being both inside and outside of the office. With 86% of workers saying financial benefits impact their desire to stay with their employer, the retention benefits of a holistic financial well-being strategy are clear.
What trends did you see in 2022 that may shape the benefits space in 2023?
BS: Throughout 2022, I’ve seen an increase in the personalization of benefit options, including financial benefits. We found three out of four U.S. workers were facing at least one source of major financial stress and it was affecting life at work. Businesses stepped in to combat this issue but recognized not everyone benefits the same way from classic offerings. This trend will grow into 2023 as companies offer choices that cater to individual needs to draw in new talent, reduce attrition, and improve the workforce’s financial well-being. Assuming 2023 brings a continued employee-centric job market, businesses will continue to go out of their way to minimize financial stress and support the growth of their employees.
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