How HR Leaders Can Help Their Workforces Juggle Financial Priorities

The Current State of Employee Finances in the U.S.

Research published in 2023 indicates that employees’ financial well-being continues to drop even though the stock market has performed favorably and inflation has abated. Bank of America (BofA) has been publishing a “Workforce Benefits Report” since 2011, and their 2023 report reaffirms this, indicating that “42% of employees rate their financial wellness as good or excellent, the lowest since 2010.”¹

MetLife has been conducting an Employee Benefit Trends Study for over two decades, and their 2023 report reflected that the financial strain employees have experienced over the last year is negatively impacting their preparedness and retirement savings:

• Over half of employees (55%) report living paycheck-to-paycheck, which is an increase from the 43% reported a year ago.²
• While 61% said they were “in control of their finances” in 2022, only 55% feel that way now.²
• Only 52% report having three months’ worth of savings, which was 62% previously.²
• Almost half of employees (48%) listed financial concerns as the cause of lower mental health, up from 31% the previous year.²
• Only 60% of employees were “concerned about outliving their retirement savings” in 2022, but now that’s increased to 71%.²

Another important finding from the BofA study is that 76% of employees feel employers are responsible for financial wellness.¹ From benefits education to promoting financial well-being resources, employers can significantly impact how confident employees feel about their financial future.

Not addressing employees’ financial well-being can be expensive. According to a John Hancock survey, “Financial stress costs employers $1,962 per employee per year in lost productivity and absenteeism.”³

Let’s look at five ways employers can help their workforce juggle financial priorities and be less distracted while working.

5 Actions Employers Can Take in 2024

1. Enhance retirement benefits – adopt Secure Act 2.0 provisions sooner rather than later.

Key changes are taking place in the retirement landscape in 2024 as several provisions of 2022’s SECURE 2.0 Act can be incorporated into employer-sponsored retirement plans. These changes should help to expand workers’ savings and incentivize employers to enhance their retirement benefits. We will list a few of the provisions, but we encourage HR leaders to research the details and begin the process of gaining approval for these modifications to their retirement plans:

• Automatic 401(k) enrollment for new employees – they can always opt-out.
• Student loan debt and education savings match – workers can have qualified student loan payments matched by their employer into their employer-sponsored retirement plan.
• More flexible hardship distributions
• Allowing part-time employees to participate in the plan
• Adding emergency savings accounts

2. Ensure your financial well-being benefits meet all the needs of your workforce.

Financial well-being program services should include one-on-one coaching for topics ranging from basic financial literacy skills (budgeting, debt management, credit) to preparing for the unexpected and funding future goals, such as retirement. Your employees may have different learning styles, so consider surveying them to ensure you invest in a program that can pivot to meet their needs.

3. Encourage employees to get education on the financial implications of health benefit decisions throughout the year.

Even after open enrollment meetings, many employees don’t understand the financial benefits of Health Savings Accounts and how to weigh these benefits against the budget implications of a high deductible health care plan. In much the same manner, employees may not take advantage of health or dependent care flexible spending accounts because they don’t understand the benefits for their budget. Education on the financial implications of health benefit plans should be promoted throughout the year, not just at open enrollment.

4. Given rising costs over the past two years, remind employees of the budgeting services available through your financial well-being program.

Almost every business has an annual and/or quarterly goal-setting and budgeting process in place. This critical discipline is as important in business as it is in an employee’s personal life. Given the recent history of high inflation, many household budgets have been overwhelmed, and employees have dipped into their savings or lowered their retirement savings contributions in order to manage monthly expenses better. Ensure your financial well-being program provides resources, such as confidential coaching, to help employees build budgets and adopt debt reduction strategies.

5. Highlight employee benefits that support overall well-being throughout the year.

Physical, mental, AND financial well-being tend to influence one another. Promote these benefits together, especially when education is provided on Employee Assistance Programs. Also, employees who have working spouses might have access to two benefit programs, leading to confusion about the choice of benefits. Ensure you have a financial well-being program that offers coaches that facilitate these broader conversations.

The Bottom Line

Employees need a financial well-being solution that can address whatever financial stress is their top priority and then transition to other topics and needs as their confidence grows. HR leaders who recognize the importance of providing a comprehensive financial well-being program can transform their workforce’s financial health.

To learn more about the MSA financial well-being program and our guaranteed results, schedule a demo or contact sales today.

¹ “Workplace Benefits Report – the Transforming Workplace.” Bank of America, Jan. 2023, business.bofa.com/en-us/content/workplace-benefits/workplace-benefits-report-overview.html. Accessed 18 Jan. 2024.

² “Growing Financial Concerns in a Changing Economy.” MetLife’s 2023 Employee Benefit Trends Study, Metropolitan Life Insurance Company, 2023. metlife.com/content/dam/metlifecom/us/homepage/institutionalRetirement/insights/InsightsPDFs/EBTS-2023-RIS-Infographic_0524.pdf. Accessed 18 Jan. 2024.

³ “John Hancock’s ninth annual stress, finances, and well-being survey.” John Hancock, Edelman Public Relations Worldwide Canada Inc. (Edelman), December 2022. retirement.johnhancock.com/us/en/financial-stress-survey. Accessed 18 Jan. 2024.