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Working Out Retirement

Financial “wellness” in the workplace is a relatively new concept. Definitions also vary.

Yet one thing is clear: U.S. workers have developed some pretty bad money habits, and organizations are realizing they’d better tend to their employees’ financial well-being as a way to maintain and improve their own fiscal health.

“If employees don’t save for retirement and budget well, that could become a burden on a company,” said Steve Vernon, consulting research scholar at Stanford University’s Center on Longevity. “You’d almost have to be Rip Van Winkle to not know people aren’t saving.”

It’s generally accepted that financial wellness falls under employer-based programs that take in the total financial picture to improve workers’ behavior and attitudes toward preparing for emergencies and retirement while maintaining control over daily personal expenses.

Financial wellness is among the hottest topics in benefits today. A recent Aon Hewitt survey showed that 93 percent of employers are focusing on their workers’ financial well-being this year compared with 76 percent in 2014.

“Companies are also waking up to the idea that traditional financial education only works for a small population,” Vernon said. “People really need a kick to get engaged, and they need more than just facts and figures.”

A few years ago, financial wellness wasn’t even on the benefits radar screen, said Matt Fellowes, founder of HelloWallet, a Web and mobile application financial guidance company. Fellowes said his research shows no press coverage using the phrase “financial wellness” between 2004 and 2007.

“This market has really come out of nowhere,” said Fellowes, who was previously a Brookings Institution fellow before creating HelloWallet in 2009.

But the need has been building. Companies have moved to more consumer-driven benefits structures like 401(k)s and high-deductible health plans that use health savings accounts. Today, workers are expected to be savvier in their every day spending and saving habits as well as know how to save and invest for retirement, and spend health dollars wisely; multiple studies show employees are ill-equipped to succeed.

Dealing With the Future, Today

In terms of having a successful retirement strategy, employees “can’t deal with the future if they can’t deal with today,” said Alison Borland, senior vice president for retirement strategy and solutions at Aon Hewitt.

Meanwhile, the American Psychological Association has shown that money and finances have been the top stressor for Americans since starting the Stress in America survey in 2007. And nearly half of full-time employees feeling some kind of financial stress believe that employers should help them solve financial security issues, according to MetLife Inc.’s 13th annual “Employee Benefit Trends Study.”

Bottom line? Americans are stressed out financially and siloed lines of education on 401(k)s and health care are providing little success.

“What’s been done in the past 10 years has been an experiment,” said Shane Bartling, senior retirement consultant for Towers Watson & Co. “Those lessons are leading to a more informed approach to get employees engaged.”

Now, employers are accessing existing tools in benefits programs and new partnerships are being formed to provide better data, tools and communication strategies.

For example, many companies have tapped into the existing portal found through 401(k) record-keepers to offer more holistic financial education, and not simply for retirement savings.

The record-keeper’s main job is to keep track of all the individual 401(k) accounts in the plan. Record-keepers know how much money is in an account, how much is being contributed and where it is invested. Participants usually access their accounts through websites run by record-keepers.

Record-keepers “do have access to the infrastructure to help deliver messages,” said Lori Lucas, executive vice president and defined contribution practice leader at consulting firm Callan Associates. “A lot of financial wellness programs are trying to plug into the record-keeper because they have a direct link to the participant.”


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