How to help your workforce rethink their financial wellbeing this open enrollment season

For both employers and their employees, this open enrollment season will be unlike any we have experienced before. From a lack of face-to-face interactions to an entirely new slate of issues challenging the workforce, employers will need to take extra steps to ensure employees are both prepared and engaged as Americans face changing financial needs amid COVID-19.

First, there are the logistical issues. In previous open enrollment seasons, some employers provide the ability to ask questions in face-to-face meetings with their HR professionals or benefits providers.

This year, there is an additional layer of challenge as employers take an extra step to compete for employee attention virtually.

Educational tools and materials must be fully accessible online. This requires a mix of optimized user experience on an HR technology platform—as well as relevant educational materials which reflect the issues we’re collectively facing.

Next, there is the reality that the pandemic has fundamentally shifted the financial hurdles your employee base is coping with day-to-day. Perhaps they are working parents juggling a full-time job with remote learning for their little ones. Perhaps they are worried about economic and market volatility as well as low interest rates impacting their ability to retire. Across the workforce, personal and financial wellbeing is top of mind.

Whether through educational webinars, targeted emails or one-on-one meetings with a financial professional, in this challenging climate the most important responsibility of HR professionals and benefits advisors is participant education.

To inform your program, here are the critical financial issues and tasks impacting your workforce in the current environment and the actions you can take to help:

Juggling financial priorities

When ranking priorities, the pandemic has pushed physical health toward the top of the list alongside financial well-being. As your employees build a financial plan to weather uncertain times, one of the first steps is selecting their workplace benefits.

Employees will have to decide how to best allocate their resources to optimize their financial picture. They must decide how much can come out of each paycheck and into their 401(k) or 403(b), how much can go into their health insurance plan and other workplace benefits—and how much they need to cover their near- and long-term goals and liabilities.

Do your employees know how much they need to contribute to get the employer match for their retirement plan—ensuring they don’t leave money on the table?

Do they understand what the total costs would be in each health care plan if they were to get sick during the pandemic? Should they stow away funds in their HSA for a future health event? Do they need to consider taking out a life insurance policy? These are all evolving needs that your employees will have to think through during this enrollment season.

Your move: Host a webinar to make sure they know what is being offered, what’s changed from last year, and how they can prioritize where the next dollar of their paycheck should go to maximize their wellbeing and security. Consider developing a tool to help employees identify what matters most to them—without falling into the trap of defaulting to last year’s elections in a very different climate.

Capitalize on a rare student debt opportunity

According to the Federal Reserve, the nation’s collective student loan balance is $1.6 trillion as of June, 2020. It can be difficult for your employees to think about saving for retirement—and securing their future—when so much of their paycheck goes to paying down their debts.

Washington has given some a break from student loan payments, for now. Payments on federal student loans have been suspended until the end of the year, and interest on these loans is being waived over this same period.

Borrowers may want to explore whether it makes sense to continue making payments since the entire amount will go toward principal and help them pay their debt off faster. For those working to qualify for public student loan forgiveness, non-payments during this time will still count toward the required 120 monthly payments.

Successfully applying for loan forgiveness, refinancing loans or making a solid repayment plan can help workers take control of debt.

Your move: This moment presents an opportunity for employers or benefits providers to host a webinar on student loan repayment planning amid COVID-19. Go over what has changed during the pandemic and make sure your workers know about loan repayment benefits and resources you offer. All generations may benefit from this session: not just recent graduates, but also older workers stepping up to finance their children and grandchildren’s education.

Put aside funds for a rainy day—while safeguarding your future

The pandemic has made many seriously focus on disaster preparedness for perhaps the first time in their lifetime.

With COVID-19 likely stretching into next year, your employees need to take stock of how much they have in a dedicated emergency savings fund. Traditionally, experts recommend having 3-6 months of expenses saved up in times of need. In the current environment, that may not be enough.

In fact, inadequate emergency savings can put your employees’ long-term financial health at risk.  At the start of the pandemic, some workers had to prematurely withdraw from their retirement savings to get by. While it may have been unavoidable to tap into their retirement savings, make sure your employees understand the risks.

Your move: Be empathetic with your employees during this extraordinary time. Send targeted emails to help those who have already taken advantage of hardship withdrawals to get their retirement plan back on track—and help those who are considering withdrawals explore the alternatives. As for the emergency savings, put together resources to encourage employees to do what they can. Small contributions made over time can add up.

Tap a pro to build your retirement strategy

As your employees get closer to retirement, their financial decisions can become more challenging.

In fact, COVID-19 has caused many to rethink their retirement plans. Some may want to relocate to retire near family. Some may have planned on working longer but are now ready to start their retirement and wondering if their plan is a solid one or whether they have enough saved.

Meanwhile, low interest rates and market volatility have overthrown the traditional 4% rule, making it more challenging for employees to feel secure that they won’t run out of savings during their retirement years. In this environment, many plans need a rethink.

Your move: Some companies provide free access to a financial pro for their workforce. If your company offers this, encourage your employees to make one-on-one appointments this enrollment season to go over their goals and optimize their benefits. Encourage advisors to use QR codes and online scheduling tools which can help your employees easily schedule meetings from their phones during company-wide financial education webinars.

There are many unknowns about the next year, and preparation is key. Plan sponsors and benefits professionals must work together to make sure employees have educational tools that can help them improve their overall financial wellbeing during this challenging time.

Gilliane Isabelle is Chief Distribution Officer with AIG Retirement Services. AIG Retirement Services represents The Variable Annuity Life Insurance Company (VALIC), Houston, TX and its subsidiaries, VALIC Financial Advisors, Inc. (VFA) and VALIC Retirement Services Company (VRSCO). All companies are members of American International Group, Inc. (AIG).