Employers can offer a path toward financial wellness, but will employees take it?
In a new TIAA survey, the pandemic has made Americans more aware of their financial wellness -- and it's not good.
When it comes to financial wellness and employees’ confidence in their own ability to manage finances and retirement, employers can play a large role in that process.
In fact, there’s a growing sense in the U.S. that employers not only can, but should play a part in encouraging employee financial wellness. That’s one finding suggested by the 2022 TIAA Financial Wellness Survey, which interviewed 3,008 Americans last fall. The pandemic has further highlighted a need for financial wellness programs among employers as 51% of all Americans are now more aware of their overall financial wellness. But according to the survey, only 22% of Americans rate their financial wellness as high – either nine or 10 out of 10. The younger Gen Z category had the lowest score with only 12% of those surveyed rating their financial wellness as a nine or 10.
And while seven in 10 Americans have a budget, only 25% follow it. Only 38% have a written financial plan and 78% say they have an emergency fund but less than half of those say they can cover six months of expenses.
Where there are financial wellness programs, there are results. For example, when given an additional $200 per month, non-retired Americans would put an average of 60% of that into retirement savings. This number goes up to 71% for people who rate their financial wellness as higher versus 45% of those with low financial wellness.
However, employers have work to do to get employees to engage with the programs that are offered. Usage of offered programs, according to the survey, was about 50%.
“It’s hard for employees to focus on their retirement when there are more immediate pressing needs,” said Snezana Zlatar, senior managing director and head of financial wellness advice and innovation at TIAA. “The most impactful financial wellness programs help address both short-term and long-term goals since they are linked together.”
According to the survey, employees who are part of employee-sponsored programs on retirement, debt management, budgeting and more are twice as likely as other employees to have high financial wellness scores with 32% versus 15% either not offered any benefits or offered but did not participate.
“People who have taken part in an employer financial wellness program can see a considerable difference, indicating that it truly makes sense for employers to redouble their activities on this front,” said Zlatar.