SECURE 2.0 offers employers new financial wellness opportunities

Based on Bright Plan’s 2022 Wellness Barometer Survey on the state of employee well-being, 72% of employees report they are stressed about their finances—which has affected workers’ mental and physical health and workplace productivity. In addition, an estimated 43.5 million individuals carry federal student loans in the United States.

In today’s competitive job market, businesses are constantly seeking effective strategies to attract and retain top talent. Financial wellness programs have emerged as a game-changer, providing a crucial solution to this challenge. Among the pressing issues employees and employers face is the savings gap, which poses significant barriers to long-term financial security. A recent survey by Aon found that employees were most commonly stressed about their day-to-day finances and the threat of inflation, rather than their long-term retirement savings.

With the passing of SECURE 2.0 earlier this year, it’s easier and more cost-effective than ever for employers to implement workplace savings programs. This article will explore how financial wellness programs address this gap, as well as highlight the benefits these programs can have on your business.

#1: Help attract and retain employees

Incorporating financial wellness programs into your employee benefits package sends a powerful message to employees and potential hires. Offering assistance and resources to help employees manage their finances effectively demonstrates a commitment to their well-being beyond the workplace. This attractive benefit can set your company apart from competitors, making it more appealing to prospective employees. According to the 2022 Workplace Benefits Report, 84% of employers now say that offering financial wellness tools can help reduce employee attrition and 81% of those people say that wellness tools can help attract higher-quality employees. SECURE 2.0 also makes it possible for employers to contribute to employee’s student loan debt or their children’s education via a 529 plan, while simultaneously saving for retirement. Offering these benefits will help employers stand out from the competition and attract and retain top talent.

#2: Increase productivity

Financial stress can be a significant distraction for employees. Money worries can lead to decreased focus and productivity, impacting the quality and efficiency of work. American businesses are collectively losing $500 billion per year thanks to employee financial stress, according to a recent survey of more than 10,000 Americans who were asked about their financial stress and its impact on work performance. And a Bank of America Study found that 84% of employees agree that employers should be more involved with helping them through financial challenges.

By implementing financial wellness programs, employees gain access to tools and education that alleviate economic anxiety, allowing them to concentrate on their responsibilities. Employees can maximize their productivity with reduced financial stress, contributing to a more effective and successful workforce.

#3: Lower absenteeism

Financial stress often leads to health issues and an increased likelihood of absenteeism. Employees may miss work to deal with financial emergencies or address personal financial matters. A well-structured financial wellness program can equip employees with the skills to manage their finances responsibly, reducing the need for unplanned absences related to financial struggles. According to a study by the American Psychological Association, financial stress is one of the leading causes of workplace dissatisfaction and can lead to increased absenteeism, and higher turnover rates. Employers can foster a healthier and more present workforce by promoting financial stability.

#4: Improve your bottom line

While financial wellness programs require an investment, they can yield significant returns for businesses.

80% of employers agree that a workforce with reduced financial stress and higher satisfaction will likely be more engaged, increasing morale and overall job performance. Employers who take it a step further and broaden their wellness programs to include mental and physical wellness resources are seeing noticeable improvements in increased productivity (50%), employee morale (41%) and employee creativity and innovation (36%) and a decrease in employee stress (43%).

Additionally, companies can save on recruitment and training costs as employee retention improves. By nurturing a financially empowered workforce, organizations can create a positive cycle of productivity and job satisfaction that directly impacts their bottom line.

Financial wellness programs are not merely a trend but a critical tool for businesses striving to attract and retain talented employees in today’s competitive landscape. The savings gap remains a challenge that affects employees’ long-term financial security, but SECURE 2.0 brings the next phase of retirement in this country. By implementing financial wellness programs, employers can bridge the savings gap, providing the support and resources necessary for employees to achieve financial stability and peace of mind.

Related: DC plans are evolving: Financial wellness is now a ‘core’ component

These programs offer various benefits, from attracting and retaining employees to increasing productivity, lowering absenteeism, and ultimately improving the company’s bottom line. As you invest in your employees’ financial well-being, you are also investing in the future success of your organization. Take the first step toward a more engaged and loyal workforce by embracing financial wellness programs as a cornerstone of your employee benefits package. Let’s build a stronger, more prosperous workforce for a brighter future together.

Patty Kim is Head of People at Vestwell.