The overall well-being of American workers has dipped to its lowest level in 12 years, and people cite personal finance concerns as the primary contributor to their declining wellness. Today, employees’ money worries have reached an all-time high, with 86% of workers saying they feel more stressed about their finances than they’ve ever been.

In this climate, it’s essential that employers develop comprehensive benefits packages that support their employees’ financial health. The best financial wellness programs focus on the following elements:

• Building employees’ financial literacy.
• Improving their ability to confidently manage their finances.
• Ensuring they can absorb unexpected financial shocks.
• Allowing them to set and steadily advance toward short- and long-term financial goals.

The Importance of Financial Wellness Benefits

At a time when the majority of employees are stressed about finances, companies that fail to take action risk negatively impacting their bottom line. Consider these figures:

• More than 80% of workers are thinking about their personal finances while at work.
• This stress adds up to a staggering $664 billion in lost productivity annually.

According to PwC, money worries also increase employee turnover rates. Financially stressed employees are twice as likely to be looking for a new job, and 73% say they would be attracted to another company that cares more about their financial well-being. On the other hand, more than 2 out of 3 U.S. employees say they’re more likely to stay at their current jobs if their employer provides financial wellness benefits.

Financial wellness is undoubtedly the #1 employee benefit for 2024. Let’s consider which ones your employees want and need most.

Top 5 Financial Wellness Benefits for 2024

1. Financial Education Programs

Financial education programs are designed to help employees with everything from the basics of financial literacy to more complex personal financial decisions, like maximizing 401(k) contributions and structuring their health insurance plans.

Additionally, they can give employees the skills they need to deal with crises or significant life events such as:

• Marriage and partnering.
• Buying or selling a home.
• Navigating the college journey.
• Having or adopting a child.
• Losing a loved one.
• Illness and injury.
• Caring for an aging loved one.

When selecting your company’s financial wellness service provider, it’s vital to ensure they offer unbiased education and guidance from accredited consultants who are not associated with the sale of any specific financial products. Also, look for service providers that offer live services during business hours and on-demand resources such as educational articles, videos, and other digital tools and calculators that address common financial well-being topics.

Did you know?

According to PwC’s 2023 Employee Financial Wellness Survey, the use of financial wellness benefits like coaching, workshops or webinars, and online tools continues to grow: In 2012, just 51% of those who said their employer offered financial wellness services had used them, but now 68% report using the services their employers provide.

2. Employer-Sponsored Retirement Plans

Like home ownership, retirement has become a financial milestone that isn’t guaranteed for today’s employees. More than half of American workers think they’re falling behind with their retirement savings, and nearly 1 in 4 workers haven’t contributed to their retirement in at least a year.

Employer-sponsored retirement plans let employees contribute pretax dollars that grow tax-deferred until retirement. These plans can go a long way to addressing the financial stress employees experience around securing a comfortable retirement. Most employees (61%) feel somewhat or extremely confident that investing in an employer 401(k) plan and other retirement savings accounts can help them build sufficient savings to reach their retirement goals.

Did you know?

88% of employees say 401(k) plans are a must-have benefit, and 75% would refuse a job if it wasn’t offered.

3. Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs)

Employees’ ability to afford health care is being stretched, and in some employee segments affordable health care may be a higher priority than a generous 401(k) match. These statistics illustrate how the current cost of healthcare impacts employee well-being:

• Today, only 3 out of 4 employees say they can afford the healthcare they need without financial hardship, and that drops to just half of employees at the lowest income levels.
• Nearly 1 in 5 workers would even accept a lower wage in exchange for more comprehensive health care benefits. Black, Hispanic, Latino, and younger workers are more likely to consider switching employers for better health benefits.

For these reasons, more employers are introducing health savings accounts (HSAs) and flexible spending accounts (FSAs). Both are tax-advantaged financial wellness benefits tools designed to help employees save money on their medical expenses.

These accounts are great vehicles to empower workers to put aside money for both medical emergencies and routine health expenses.

Did you know?

The qualified medical expenses employees can use with their HSA or FSA funds are generally the same. These include co-pays for doctor’s visits, over-the-counter and prescription medications, eyeglasses, dental care, and more.

4. Access to Emergency Funds

Financial wellness benefits like emergency savings accounts (ESAs) help employees bridge financial gaps. These expense perks can be a lifeline for the many workers who don’t have an adequate emergency fund:

• Only 63% of U.S. adults say they can cover a $400 expense using cash or its equivalent. The remaining 37% would have to borrow or sell something to cover it.
• More than 1 in 3 U.S. adults have more credit card debt than emergency savings.

Using ESAs, companies help their workers build emergency funds through automatic deposits from their paychecks.

Did you know?

44% of workers consider an employer-matched ESA the most compelling benefit a company can offer when looking for a job. Another 4 in 10 said they’d prefer an employer-matched ESA over a 401k plan.

5. Earned Wage Access

The timing of pay can directly impact employees’ ability to pay bills or unexpected expenses on time. Thanks to advances in financial technology, today’s workers can have instant access to the money they’ve earned instead of waiting to be paid during the next bi-weekly or monthly pay cycle. This modern payroll model, known as Earned Wage Access (EWA), has become a highly sought-after financial wellness benefit.

Essentially, EWA allows companies to give their workers more control over their financial liquidity, therefore improving their financial health. Workers are empowered to make spending and savings decisions that best suit themselves and their families. Best of all, having access to their wages on-demand helps them avoid high-interest payday loans or overdraft fees.

Did you know?

75% of people say Payactiv’s EWA has helped them cope with inflationary pressures, and 70% of users report improved satisfaction with their employer because of Payactiv.

Towards Financial Stability and Resilience for All

As the cost-of-living crisis continues, workers are increasingly looking for support from their employers with their finances. With a well-established link between financial stress and productivity, there’s every reason why financial well-being should be at the top of every company’s agenda.

As we’ve explored, the best financial wellness programs focus on enabling employees to properly understand what’s in their control, what opportunities lie ahead, and how to capitalize on those opportunities to improve their circumstances and achieve their financial goals.

With growing awareness of how financial ups, downs, and unknowns, are affecting their workers, leading businesses are partnering with Payactiv to develop financial wellness programs that address their employees’ financial stress. Learn more about Payactiv today!

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