Broadening benefits helps caregivers get back on track for retirement savings

Half (49%) of all caregivers report their family responsibilities have had a severe or major impact on their ability to prepare for their retirement, according to a Voya Financial survey. However, employers can use workplace benefits to help employees with caregiving responsibilities, which will boost retirement savings.

Employees are more likely to stay with their employers if the company provides access to health spending and savings accounts (51%), voluntary benefit offerings, such as critical illness, hospital indemnity, disability income, accident insurance (51%), and comprehensive caregiver planning resources (36%) — all which can have a significant impact on those with disabilities and their caregivers, who often face financial challenges connected to their dual responsibilities at home and work, according to Voya.

“Employers that prioritize traditional workplace benefits coupled with specific caregiver resources have an opportunity to create an environment that can foster employee loyalty, reduce turnover and enhance overall productivity,” said Carole Mendoza, VP, benefits at Voya Financial. “However, it’s important to ensure employees are aware of and understand all the benefits and resources available to them, particularly employees in diverse communities.

“Caregivers often report difficulty finding money to save for the future with costs for medical and other basic needs rising. In fact, nearly half of those recently surveyed by Voya said that being a caregiver has severely or majorly impacted their ability to prepare for retirement.

“For employers, this situation presents an opportunity to show support for caregivers, who often already have workplace benefits that can help improve retirement readiness. For example, caregivers may be able to obtain life and disability income insurance through their employers — with reduced or zero out-of-pocket premiums. And employee assistance plans (EAPs) can offer wellness and mental health benefits at reduced fees or no cost, freeing up money employees may have used to pay for these services. Those funds can then be reallocated to retirement savings.

In addition, the availability of Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) provides employees the opportunity to make tax-free contributions via payroll deductions. “These accounts can help prepare caregivers for unexpected medical expenses, something else that can derail retirement savings,” said Mendoza.

“Employer-sponsored retirement plans, especially those like a 401(k) with an employer match, can help to bolster the contributions that caregivers are able to make toward their retirement savings.”

Aside from retirement savings, caregiving responsibilities severely or majorly affect several other aspects of their finances, according to Voya, including:

• home purchase (40%)
• mortgage/rent payments (38%)
• having a child/childcare costs (35%)
• college expenses/student loans for themselves or dependents (30%)

Asian, Hispanic and Black Americans also report higher impacts on mental wellness (66% vs. 43%), health care costs (64% vs. 44%) and buying a home (52% vs. 31%), compared to white caregivers, according to the survey.

“Caregiving comes with significant emotional challenges, and the financial strains are often a concern,” sais Mendoza. “In fact, Voya’s research found that 27% of caregivers changed jobs to provide care. However, employers can play a critical role when it comes to supporting caregivers in the workplace.”

More than half (53%) of caregivers agree or strongly agree they are likely to use caregiver resources and support offered through employers, including educational articles, checklists and planning document templates.

Supplemental benefits

“In addition to more traditional employee benefits, many employers offer supplemental benefits that can help caregivers in both the short term and long term,” said Mendoza. “A caregiving concierge service can help balance work and caregiving responsibilities by navigating innumerable care situations or challenges. At Voya, we offer Wellthy at no cost to employees to match employees with a dedicated care coordinator to help care for loved ones who are aging, chronically ill, disabled or need medical care. The benefit makes it easier for caregivers to take care of their own health, reduce stress, save money, and stay engaged in their work and personal lives while taking care of their loved ones.

“Also, employers can help caregivers learn more about ABLE accounts to help manage expenses associated with caring for an individual with a disability. These tax-advantaged savings and investment accounts allow qualifying individuals to accumulate funds without interrupting government benefits eligibility. ABLE accounts can be used for a broad array of Qualified Disability Expenses (QDEs) to help enhance the quality of life for a person with a disability. Individuals with disabilities diagnosed prior to age 26 may be eligible to contribute to an ABLE account. Caregivers, loved ones and even employers also can contribute to ABLE accounts for an eligible individual.

“Most importantly — to pull all the available benefits together — employers can offer caregivers financial planning consultations with an experienced consultant who answers questions about government benefits, company benefits and financial considerations for caregivers and people with disabilities.”

Related: Family-first employer? 4 ways to boost retirement benefits with caregiver support

When retirement savings suffers, caregivers need help in making saving and investment adjustments to bring them back on track. “Employers have an opportunity to demonstrate a commitment to an inclusive and supportive workplace for caregivers and all employees,” Mendoza added.

“Offering comprehensive benefits that include support for caregivers can also be a significant factor in attracting and retaining talent, along with promoting higher job satisfaction and overall well-being. Benefits, such as health savings accounts, flexible spending accounts, legal insurance, disability and long-term care insurance, and targeted planning and education resources for the disabilities community continue to be an untapped caregiver-retention tool for many employers.

“Employers that prioritize traditional workplace benefits coupled with specific caregiver resources have an opportunity to create an environment that can foster employee loyalty, reduce turnover and enhance overall productivity. In fact, Voya research shows that more than seven in 10 workers are willing to accept a job with a slightly lower salary for better health care and medical coverage, including lower premiums and out-of-pocket costs. Almost six in 10 are willing to trade salary for employer HSA contributions, mental health resources and voluntary benefits, such as critical illness, disability, accident insurances.

“These benefits can not only boost opportunities to save for retirement but can be helpful in recruiting employees. With almost half of non-caregivers recently surveyed by Voya saying they are likely to become a caregiver in the future, having these benefits in place can ensure retention of valuable employees, as well.”