Cost of living is the top concern for employees, with retirement preparedness taking the back seat
The Employee Benefit Research Institute (EBRI) has revealed the findings from its sixth annual Financial Wellbeing Employer Survey, shedding light on the key reasons employers choose to provide financial wellness benefit programs. The study found that productivity and employee satisfaction were the primary drivers behind employers' decisions to offer financial wellness benefit programs.
The report found a clear shift, with the high cost of living emerging as the top issue to address through financial wellness initiatives, surpassing retirement preparedness for the first time. Retirement preparedness, although still a significant focus, now holds the second spot. Other key areas of concern for employers include health care costs, budgeting, money management, and daily living expenses.
According to Craig Copeland, Ph.D., director of Wealth Benefits Research at EBRI, financial wellbeing programs are increasingly used to boost employee satisfaction and retention. While employers acknowledge the challenges related to the costs, both to employees and the company, they are optimistic about the future.
“Perhaps as a result, employers frequently cited measuring their financial wellness offerings’ impact on employee productivity and worker satisfaction,” Copeland said. “At the same time, most benefits decision makers reported being optimistic that their company’s budget for these benefits will increase in the short term so that they anticipate continued development of these programs.”
Key findings from the 2023 Financial Wellbeing Employer Survey
- Financial wellness programs: Employers primarily gauge the success of financial wellness initiatives by considering increased employee productivity and improved worker satisfaction. Improved utilization of existing employee benefits and enhanced employee retention followed suit.
- The cost-benefit analysis: 87% of companies reported developing cost-benefit analyses based on factors like employee satisfaction, employee attraction/retention, employee productivity, and medical/mental health claims to assess their financial wellness offerings. Employers are increasingly weighing the direct benefits of these programs against their costs.
- Key concerns and focus areas: High living costs, retirement preparedness, and health care expenses emerged as the top issues that employers aim to address through financial wellness initiatives. The primary focus areas include investments and retirement planning, followed by basic financing, education, and consulting programs.
- Mental health: 85% of companies reported that financial wellbeing initiatives had an evident impact on employees' mental, emotional, and social wellbeing. Additionally, 48% of companies offered mental health benefits or coverage, often as part of major medical/health insurance or through separate services.
- Caregiving benefits: Employers mainly offered caregiving benefits related to flexible work arrangements, including teleworking or compressed workweeks. Other benefits included long-term leave policies and paid family caregiver leave policies. A quarter of employers indicated plans to introduce these caregiving benefits in the next 1-2 years.
- Diversity and inclusion: Companies were more inclined to offer various solutions targeting different genders, races/ethnicities, and ages in their financial wellbeing initiatives. Ensuring diverse financial counselors and coaches was also a focus, although tailoring messages for diverse groups was less common. To understand the unique needs of diverse workers, surveying employees emerged as the most prevalent step taken by companies.