As I have covered in two previous blog posts, employers provide the benefits that set the foundation for employees’ long-term financial wellness, specifically retirement plans and health-care coverage. And, workers need help understanding these benefits so they can maximize them, particularly in the context of their other financial goals.
For example, a young person with student loan debt at a high interest rate might be better off using extra money to pay down his student loans rather than contributing extra money to a 401(k)—assuming he had already contributed enough to get his employer’s match.
Where Do Employees Turn for Guidance?
Unfortunately, most employers aren’t helping their employees understand how their workplace benefits tie into personal financial health. Only about one-quarter of respondents to our survey reported that they had learned about personal finance from their employers. Workers were more likely to have learned about personal finance from family members (62 percent) or from a class in high school or college (36 percent). When American employees actively seek financial guidance, they generally look to sources other than their employers as only 8% of employees seek financial advice from their employers.
Why Should Employers Help?
Many employees would likely be receptive to additional guidance from their employers on retirement, health, or other benefits. Saving for retirement was the most frequently cited goal among survey respondents, at 71%. Employees were much less likely to cite managing health expenses as a financial goal compared to preparing for retirement. As employers begin to offer consumer-driven health plan and people take on responsibility for saving for medical expenses, this may change. The shift from traditional to consumer-driven health plans is similar to the shift from defined-benefit retirement plans to defined-contribution retirement plans. Both require employees to make complex decisions about how to manage their employee benefits as opposed to receiving a defined benefit.
In sum, the mismatch between the sources of employees benefits and the sources of guidance demand a response from employers if they hope to have their workers maximize the benefits offered to them at work.