Financial wellness and the Red Queen's race
The Red Queen in Alice in Wonderland had to run twice as fast to get half as far. Sound familiar?
The Red Queen in “Alice in Wonderland” famously said she had to run twice as fast to go half as far. In the benefits world, we see multiple examples of Red Queen’s races, and they affect our customers in both macro and micro ways. Consider a few “fake news” quotes I just made up:
- “We have problems related to health care and retirement in America. How do I push them into the future so I don’t get blamed? I need to be reelected soon. – U.S. politician’s strategy, 2019
- “This summer, I became one year older and years further from a secure retirement.” – Baby boomers, 2019
- “Neither Medicare nor Social Security funding is going well. Who is worried, besides me?” – Alfred E. Neumann (OK, me), 2019
- “How can I afford everything I want while still paying for things I need?” – Far too many Americans
The race is on! On the micro side, we have the race for individuals to afford current benefit costs while saving for retirement. We see the cost of medical care (and related insurance benefits) going up faster than wages. There are many benefit needs not funded by employers, so they are offered on a voluntary basis.
Related: BenefitsPRO 2019 voluntary survey: Change is in the air
On the retirement front, the good news is people ages 65 and up are living longer than ever. The bad news: longevity translates to a need for more retirement savings. How can employees afford this? Ask the Red Queen!
On the macro side, in the past couple of weeks, we have seen quite a bit of non-fake news about the Red Queen’s race to adequately fund our public benefits. Current funding of Medicare Part A (hospital benefits) will no longer be adequate by 2026.
Meanwhile, the trustees of the Social Security fund have announced that the fund will be depleted in 2035. The funding inadequacies of these programs have been known for decades, and relatively little action has been taken. Let’s face it: There is little we can do to win the Red Queen’s race on the macro side, other than our own voting and education on the issues.
Happily, on the micro side, we can be more proactive. Consider actions we can take to help employers and their employees:
First, we need to help employers offer benefit plans that are both relevant to employee needs and affordable. Clear communication of benefit options to employees is essential. Employees should have a clear picture of why the benefit options we are offering are important to them and their loved ones. The most effective benefit communications programs include both in-person enrollment communication sessions and online information options.
Second, financial wellness education across a broad range of topics (budgeting, debt management, planning for large purchases, etc.) can help employees navigate both their current financial management and their longer-term needs for adequate retirement. Many of us have exacerbated the issue because, to use another literary allusion, for years we acted like the grasshopper, spending what we made (and more) instead of stocking it away for the long winter like the wiser ants.
By nature, the Red Queen’s race is neverending. The work we do today to help employers and employees is the foundation of their ability to keep racing in the future. There will never be a better time to emphasize the need for effective benefit communications and providing ongoing financial wellness resources to employees.
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