One way for companies to combat their employees’ lack of retirement readiness is to throw cash at their 401(k) plans, but that’s a lot easier said than done. A solution that has longer term and multi-faceted, positive outcomes is a financial wellness program.

Financial wellness, which is rising in popularity, is defined as:

• Low or no financial stress
• Living at or below your means
• Having an emergency fund
• Having a financial plan and understanding your savings.

When it comes to financial wellness, employer and employee goals are aligned. An employer aims to be paternalistic, decrease costs, obtain ROI, and have a dynamic workforce. Employees want to be financially well and have the ability to retire when they’re ready to retire.

The building blocks of a successful financial wellness program are like a pyramid, where financial knowledge is the foundation. Education is a huge piece of financial wellness because it’s not a topic that’s taught in school. Employees understand the importance of eliminating debt, and use the knowledge they gain to create personal budgets. Education is also a key tenet of the upper tiers of the pyramid.

When it comes to financial wellness, employer and employee goals are aligned.

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Financially “unwell” employees lead to financially stressed employees. The number of people that are affected by financial stress is staggering. PricewaterhouseCooper’s (PwC’s) 2017 Employee Financial Wellness Survey, shows:

• 53% of workers overall are stressed about their finances
• 46% of workers spend three or more hours during the work week dealing with or thinking about financial issues

Financially “unwell” employees lead to financially stressed employees.

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Financial stress is not only debilitating for both employees and employers. The financially quantifiable aspects of human capital affected by financial stress include:

• Employee retirement readiness
• Health
• Absenteeism
• Productivity
• Better use of and understanding of employer benefits (i.e., HSA, health plans, 401(k) etc.)
• Workers’ compensation

The graphic to the right shows health issues that can arise from financial stress:

Employers have looked at financial wellness programs as the right thing to do, and are now able to quantify the positive benefits of implementing a financial wellness program.

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