Americans are Looking to Employers for Financial Wellness Benefits
A survey released by NAPFA found that nearly seven in 10 Millennials and Generation Z Americans say that stress surrounding their personal finances has negatively affected their productivity at work. Eighty-seven percent of working Americans reported feeling stressed about their finances, and nearly one-third (32%) reported spending half an hour or more a workday thinking about their finances.
Survey data also found that nearly four in five (79%) working Americans believe employers should be more aware of their employees’ financial struggles. Almost seven in 10 (69%) respondents said they would perform better at work if their employer offered more financial wellness benefits, with more than four in five (81%) Millennials agreeing.
In addition to financial stress in the workplace, the survey revealed that Americans across generations are questioning their financial future. Nearly three in five (58%) working adults have contributed less money toward retirement due to inflation, and close to half (49%) of respondents felt they could not retire comfortably on their employer-sponsored retirement plan alone.
The survey was conducted online by Atomik Research among 2,005 working adults under the age of 65 in the United States. The fieldwork for the online survey took place between September 16 and 28, 2022.
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FAQs Answered by NAPFA Advisors
Q: How can I balance inflation and saving for retirement?
A: During difficult economic conditions, it is important to have good financial habits. Habits like limiting your spending and increasing your savings can help ensure you will be successful. There is no question that when the cost of everyday living goes up, saving for retirement gets harder. If cutting back on saving is necessary, assess which accounts should be a priority. For example, giving up your employer's 401(k) match to save in an unmatched account such as a Roth IRA is likely unwise and not providing you with the best bang for your buck.
Q: How can young people start saving for retirement?
A: For those just starting, the robo-advisor tech solutions can be incredibly helpful in reducing barriers to entry and simplifying the process. Also, if your company offers a company-sponsored plan and offers matching contributions, make at least the minimum contribution to get the company match - this is the free money. If you have the ability to contribute more, do so. Starting as soon as possible provides a longer time horizon for your money to compound.
Q: What is the best way to save for retirement?
A: An individual must have a plan; if not, saving likely won’t happen. There should be a balance between saving for tomorrow and living for today. There are so many tools to save for retirement that identifying the best way will depend on your personal situation. That being said, there is usually a list of low-hanging fruit to look for – Employer-matched 401(k), Roth IRA in low tax years, triple-tax-free HSA for those with high-deductible healthcare plans (yes, as part of retirement planning) and employee stock purchase plan (ESPP) discounts. Just be very cautious of recommendations to buy life insurance for retirement savings; rarely do consumers end up ahead in that arrangement.
Q: What can individuals do to save for retirement who may have started late?
A: Prioritize your savings goal. Do an assessment of your current assets at the beginning of the year and then make a plan as to how much you can save each month. Then review at least quarterly to see if you are on target. If not, assess why not and get back on track. Also, building passive or part-time income sources can be surprisingly powerful. For example, an individual that is able to reliably generate $20,000 per year in passive or part-time income during their retirement years needs nearly $300,000 less in their portfolio at retirement.
Q: How can I find a financial advisor?
A: There are several helpful search tools available today, such as NAPFA’s Find an Advisor platform. When you start searching, look for a Fee-Only financial advisor who is a fiduciary and someone with whom you can establish a connection.
Do your research
- Learn about the background of the advisor and the services that are offered. Are those the services you are looking for?
- Look for indicators that show an advisor is committed to financial education and expertise, such as through the Certified Financial Planner CFP® certification and involvement in reputable professional organizations that require strict continuous learning and ethical standards like the National Association of Personal Financial Advisors.
Interview Potential Matches
- Ask questions and look for an advisor who wants to partner with you to understand your situation. By understanding your unique goals and challenges, a specialized planner is better able to help provide personalized guidance than a generalist.
Q: How can my company work with a financial planner to offer financial wellness benefits?
A: First, a company needs to begin by understanding the financial needs and challenges of its workforce. Once this has been determined, the company should engage a Fee-Only fiduciary planner who provides unbiased advice that is in the employee’s best interest. The planner should be an educator who answers employees’ questions about finances to reduce financial stress. Financial wellness is an imperative part of overall well-being, very much like physical and mental well-being, so selecting the right planner can be a huge benefit for any company’s workforce.