Prior to COVID-19, many employees were already struggling to successfully save for retirement, often prioritizing day-to-day expenses rather than saving for the future. 55% of employees expect to postpone their retirement due to their financial situation.
Metlife’s Employee Benefit Trends Study reported that employees are significantly more likely to have poor financial health if they:
Don’t have a defined retirement contribution plan (like a 401k)
No Defined Retirement Contribution Plan
Significantly behind, or haven’t started, retirement savings
Lack of Retirement Savings
Don’t have a retirement plan that allows them to convert their money at retirement into guaranteed income
Retirement without Income
How much have employees been affected by COVID-19? At FinFit, we’re focused on providing the necessary support for our members to help them regain and maintain their financial stability. We went to the data to see how employees have been directly impacted by COVID-19. Since March 15, there has been a 20% increase in FinFit members that do not contribute to their 401k.
20% more employees were contributing to their 401k prior to COVID-19. The data also shows that 11% of employees have stopped paying down debt since the COVID-19 crisis. Unfortunately, this is not surprising with nearly one in three Americans experiencing temporary layoff, permanent job loss, a reduction in hours or reduction in income as a result of the coronavirus situation. Employees are tackling current financial challenges; they have been forced to prioritize current financial needs over longer-term planning.
Taking a vacation has always been a top financial goal based on our member data. Since March 15, there has been a 16% decrease in employees’ that previously had taking a vacation as a top financial goal.
Now? We’ve seen a 14% increase in employees’ who have prioritized setting up an emergency fund as a top financial goal.
Why are financial wellness services so critical for helping your employees navigate this current financial crisis as well as future financial challenges that certainly will come?
Holistic financial wellness programs are designed to help employees manage their finances in the short-term, create a plan to achieve their long-term financial goals while handling unexpected challenges along the way. Financial wellness gives individuals the ability to pursue opportunities due to the stability of having a day-to-day financial system, which includes the capacity to spend, save, borrow, and plan effectively.
A well-structured financial wellness program provides tailored guidance and recommendations specific to each employee’s unique financial situation. Appropriate knowledge and resources give employees the confidence and means to manage their financial lives, from weathering unexpected challenges to paying down debt to saving for retirement.
Financial wellness services are even more valuable during crises like the COVID-19 pandemic, helping employees manage and reduce the stress brought on by financial challenges and allowing them to maintain a positive state of mental well-being. It is critical to have the appropriate support, resources and mindset to attack a crisis like COVID-19 with optimism and battle back to the positive side of the mental and financial health scale.