Skip to content
Jessica Brady October 24, 2017 6 min read

Understanding—and overcoming—the challenge of saving for the future

For most of us, the phrase “it’s complicated” pretty much describes our relationship with our finances. We all know the importance of saving: If we want to live comfortably in retirement and have enough stashed away to pay bills and have a little fun, then we need to save a good chunk of our income now. But understanding the reason for saving doesn’t make it any easier to do it.  

I wanted to understand why. What I learned is something every employer should understand to help employees succeed at saving. And yes, you want to do that, because when employees feel financially secure, they’re more fully engaged and productive at work.

Unpacking the challenge of saving

When it comes to finances, “People are predictably irrational,” says Dr. Mitesh Patel, a behavioral economist, physician, and assistant professor at the University of Pennsylvania’s Perelman School of Medicine. Dr. Patel is quoted in the article, “The Perplexing Psychology of Saving for Health Care,” which explains that having enough money on hand to save for the future is just one hurdle we must overcome.

Psychologists and behavioral economists have uncovered another, possibly even greater hurdle—our own psyche. The article goes on to say:

"How we think and feel is directly tied to our ability to make 'good' financial decisions," says Alycia DeGraff, a board member and secretary of the Financial Therapy Association. When faced with financial decisions about the future, many people simply get stressed out.

"These stressors can become so overwhelming that ... we can become debilitated and ignore the situation altogether," she says.

DeGraff is right. When it comes to thinking about our financial future, we are stressed, and there’s data to back it up. PwC’s 2016 Employee Financial Wellness Survey found that:

  • 45% of employees said financial matters cause them the most stress in their lives.
  • Not having enough emergency savings for unexpected expenses and not being able to retire when they want to were the most frequently cited financial concerns.

It’s also worth noting that Millennials, now the largest share of the U.S. workforce, are likely to be stressed about their finances and distracted by their finances at work.

  • Nearly half the Millennials surveyed find it difficult to meet their household expenses each month, even though they are employed full time.
  • 42% of Millennials have student loan debt, and 79% of them say that their student loans have a moderate or significant impact on their ability to meet their other financial goals.

Of course, Millennials aren’t the only ones feeling the squeeze. Twenty-two percent of employees now provide financial support for parents or parents-in-laws (up 6% from 2015), according to the survey.

What does all this mean for employers? 

For starters, potentially a less engaged and less productive workforce. According to the 2017 Workplace Benefits Report by Bank of America and Merrill Lynch of the employees who said they feel stressed, 53% reported that it interferes with their ability to focus and be productive at work. In fact, employees spend a median of two hours each week handling personal financial matters at work. That’s 2 and half weeks a year!

With the constant financial tug-of-war we face daily, it’s easy to see why people aren’t saving more for their future (“How can I save for something 30 years from now when I can’t even pay my bills today?”), and how the stress can spill over into other areas of our lives.

When employees are worried about taking care of their personal lives, they’re less engaged and productive at work—a direct hit to employers’ bottom line. In addition to caring about the people who contribute to your company’s success, it makes financial sense to address their issues head-on.

5 Things you can do to help

Here are five things you can do to help your employees navigate their finances and bring their best selves to the workplace.

  1. Ask your employees what’s keeping them up at night. This can be as simple as putting out a quick online pulse survey, a more in-depth online survey (think Survey Monkey®), or even conducting in-person focus groups. There’s no better way to find out what you can do to help your employees than to hear it directly from them. If you’re going to invest time, energy, and money into resources to help them, you want to make sure you’re offering benefits and programs they value and will use.
  2. Consider enhancing your benefits package with programs and resources that can support financial well-being. These might include:
  • Financial counseling and retirement planning services.
  • Educational assistance programs, including student debt consolidation.
  • Child care and elder care programs.
  • College coaching to assist with the college admissions and financial aid process.
  • Voluntary benefits, like identity theft protection, auto and homeowner’s insurance, pet insurance, and critical illness and accident insurance.
  1. If you have a wellness program, consider extending the meaning of “wellness” beyond physical health, to include financial and emotional health, too. It’s likely you already offer benefits that fit in to these categories (think: retirement plans, health advocacy services, and employee assistance program), so it’s just a matter of packaging them together under an expanded wellness umbrella.  
  2. If you offer a high-deductible health plan (HDHP) with a Health Savings Account (HSA), make sure you market the HSA’s financial perks:
  • Tax-free contributions—Employees contribute to their HSA on a pre-tax basis, which reduces their taxable income.
  • Tax-free earnings on accumulated funds—The HSA grows tax-free. Interest and investment earnings are not taxed.
  • Tax-free distributions for qualified expenses—Employees don’t pay taxes on withdrawals to cover eligible health care expenses.
  • Employees can choose when to use HSA funds—The money can be used now or for future health care expenses, including those in retirement.
  • The account balance rolls over year to year—There’s no use-it-or-lose-it provision.

You may want to consider adding an employer contribution to the account (either an automatic contribution, a match incentive, or one tied to wellness program participation) to sweeten the deal and encourage more employees to take advantage of this savings vehicle.

  1. Major life events, like buying a home or dealing with a serious illness, have a profound impact on employees’ finances. Tap your communication channels and vendor resources for communications that speak to how employees can better prepare for the financial impact of major life events—and minimize the impact on other aspects of their lives. 

Remember, your employees want to hear from you. Many already know their workplace offers professional financial planning assistance, but they don’t know where to start. It’s up to you to help point them in the right direction.

At the end of the day, we all have different financial concerns and priorities, depending on our goals, values, and stage of life. As an employer, you can help make saving seem a little less daunting for employees—and create a win-win situation for everyone.

If you’re not sure where to start or how to talk to employees about financial wellness, give us a holler! We can partner with you to help create a healthier, happier workforce, so you can have a more productive, profitable business. 

Jessica Brady

Jessica Brady, VP Senior Consultant, draws upon her extensive benefits expertise and communications experience to create winning communications strategies for her clients.