retirement Archives - Best Money Moves

4 Ways to Help All Employees Prepare for Retirement

by Amirah Ford | Sep 6, 2022 | Blog

4 ways to help all employees prepare for retirement. Data suggests that most U.S. households are behind on retirement savings. Here’s how companies can help their employees prepare for retirement.

As a large number of Americans approach retirement age, many worry about rising costs. Employers are worried, too — 75% of employers fear that employees don’t have enough retirement savings, according to a TIAA survey and another 64% worry that employees may outlive their savings.

Learn how companies can help all employees — from new hires to those about to retire — prepare for retirement and financial stability in future.

About 8 in 10 pre-retirees cannot afford to retire

Most pre-retirees, or people 50-64 years old, do not have enough savings for retirement. In fact, according to a McKinsey study, over 80% of U.S. pre-retiree households are financially unprepared for retirement.

However, the actual percentage may be higher. This is because 1/3 of people have a false sense of confidence around their retirement preparedness, per the same McKinsey study.

Unforeseen and external factors can keep people from reaching their retirement goals, or even stop them from making retirement a priority. Here are three common challenges pre-retirees face, as they consider retirement:

Inflation is on the rise.
Overtime, inflation can erode the purchasing power of the dollar — meaning the same dollar today won’t buy as many goods in the future. In turn, this can make retirement more expensive, as the dollar becomes devalued. It also means that people will have to save more now to account for future losses during retirement.
Focusing on other financial goals.
Some people are focused on paying off student loan or credit card debt, as opposed to saving for retirement. Others may be looking to buy a home or just simply make ends meet — for this month. Regardless of one’s situation, not everyone’s focus is on retirement and not everyone prioritizes financial goals in the same way.
Unable to afford long-term care.
The older people get, the more assistance they may need with daily activities and care. According to a Health Affairs research article, by 2029, 60% of seniors will have limited mobility and 20% will have a high need for health care and functional assistance. However, more than half won’t be able to afford the care they need.

4 ways to help all employees prepare for retirement:

Here are 4 ways companies can help their entire workforce prepare for retirement:

1. Offer a holistic financial wellness program.

Preparing for retirement requires more than just saving, it requires intentional planning and sometimes advising. However, not everyone can afford access to these resources.

Consider investing in a holistic financial wellness program, which helps employees reach both short-term and long-term financial goals. Regardless of an employee’s situation or income level, a quality financial wellness program will provide personalized advice, for the near-term and long-term.

2. Consider auto-enrollment to encourage all employees to prepare for retirement

Auto enrollment is a company program that automatically enrolls all employees in a 401(k) or another retirement plan. The goal of auto enrollment is to increase employee participation in retirement benefits, but it also helps employees save earlier, and longer over time. A Principal survey found that 84% of employees say the key reason why they started saving for retirement so early is because they were auto enrolled by their firm.

3. Help employees prepare for retirement by educating them on their retirement benefits

Moving can be costly, especially when moving out of state for a new job. For instance, in the Chicago, Ill. metro area, the median asking rent is $2454 per month, according to Redfin data, and $4000 in the Boston and New York metro areas.

To help reduce the financial burden of moving and housing, some leading companies have invested in relocation support for employees (e.g., company-sponsored moving services, subsidies or even temporary corporate housing). By offering relocation benefits, companies can support housing security for all employees, while themselves apart from the competition.

4. Start a company match program

A popular incentive companies use to get employees to save for retirement is by starting a company match program. When an employee contributes to their retirement fund, under a company match program, their employer will contribute the same amount, or in other words, “match” the contribution. This can help employees reach their financial long-term goals, with the financial support of their firm.

Need a financial wellness solution for your team? Try Best Money Moves!

Best Money Moves is a mobile-first financial wellness solution designed to help employees meet their most top-of-mind financial goals. With budgeting tools and personalized money coaching, users can easily receive comprehensive financial advice right from their phones.

Focused on user-friendliness, Best Money Moves is designed to bring financial wellness resources right to the fingertips of employees. Our dedicated resources, partner offerings and 700+ article library make Best Money Moves a leading benefit in improving employee financial wellbeing.

To learn more about Best Money Moves Financial Wellness Platform, let’s schedule a call. Contact us and we’ll reach out to you soon.

Closing the Gender Retirement Gap: How Financial Wellness Can Help

by Amirah Ford | Mar 28, 2022 | Blog

Closing the gender retirement gap: How financial wellness can help. Female employees still face workplace disparity when it comes to retirement planning. Here’s what employers can do to close the gender retirement gap.

Despite progress toward gender equity in the workplace, women still face disparities in retirement preparedness. Men have about 40% more income than women during retirement, according to the OECD, and this trend isn’t limited to the U.S. In fact, nearly every retirement system in the world suffers from the gender retirement gap.

Find out how the gender retirement gap affects your employees, and how financial wellness and other strategies can help level the playing field.

What is the gender retirement gap?

The gender retirement gap refers to the difference in retirement preparedness between men and women — it largely stems from the gender wage gap. According to data from the Center for American Progress, white women earn only 79 cents for each $1 earned by white men. Race furthers this disparity, with Black and brown women earning only 60 cents.Preparing for retirement takes years of saving. So, lower wages earned for an entire career compound into significant differences in retirement preparedness.

How to fix the gender retirement gap:

Employers can help bridge the gender retirement gap; however, doing so requires dedication to employee financial wellness and equity.

While there is no fix-all solution, here’s 3 ways to help join the gender retirement gap:

1. Extend flexibility and family leave to parents of all genders

Women are more associated with time away from the office, especially when it comes to childrearing and the home. Under federal law, employees are only guaranteed 12 workweeks of unpaid family medical leave; however, the loss of income can be detrimental to household finances.

With little federal guidance, employees must depend on their employers’ leave policy.

Parental leave policies typically give women substantially more time off than men, and for most women, their leave is unpaid. Less than 25% of employees receive paid parental leave, according to BLS data, and they typically receive only a percentage of their original paycheck.

When thinking about family leave policies, consider birthing and non-birthing parents and how each may need support. Some companies allow flexible or hybrid work hours, which allow working moms to gradually re-enter the workforce. Others offer family leave of at least six weeks to both, so it’s easier to balance and share home duties.

2. Address career differentials by gender to avoid wage gaps

Since women take on more part-time and unpaid work than men, overtime, this accumulates to women spending less time in the workforce than men. On average, women spend nine fewer years in the workforce, which can hurt women’s pay and promotional opportunities. Less money now means even less during retirement.

Pension plans often require a minimum salary or hours worked for pension payouts. This lessens retirement security for low earners and part-time workers, who are disproportionately women.

Take an honest, critical look at your company and see how you may overlook employees on leave during promotions and bonuses. This can help create equal opportunities for men and women to advance their careers and pay — which may mean reforming employee skills matrices to be more inclusive of those who take leave. Employees should never feel penalized or professionally stagnated for taking time off.

3. Offer employee financial wellness resources and education

Women, on average, are less financially literate than men. When quizzed on personal finance, 21% of women exhibited a relatively low level of financial literacy, compared to 15% of men, according to the TIAA Institute. And when looking at specific financial topics, like investing, the financial literacy gap only widens. Gaps in financial knowledge, such as these, can enlarge the gender retirement gap.

Researchers also think the gap could be explained by women spending more income on the home (e.g., groceries, daycare and cleaning) than they do on retirement or themselves.

Nonetheless, as a solution, experts at Mercer have advocated for financial wellness to help close the gender retirement gap. Through financial wellness programs, women can receive personalized money coaching and other tools to increase their overall financial preparedness.

A major perk of financial wellness programs is that their personalization helps employees of all income brackets and ages. From fresh post-grads, to even those close to retirement, all can benefit from financial wellness resources and guidance — they are to help people achieve their financial goals, while dialing down financial stress.

Need a financial wellness solution? Try Best Money Moves!

Best Money Moves can help your employees address their financial stress and become prepared for retirement, regardless of their stage in life or previous money habits. Best Money Moves offers personalized financial wellness resources and education, focused on solving your employees’ pain points. The program uses artificial intelligence and a human-centered design to measure employee financial stress and then dial it down with personalized solutions. Our budgeting tools, personal finance guidance and more helps employees make more informed financial decisions and reduce their overall stress.

To learn more about Best Money Moves Financial Wellness Platform, let’s schedule a call. Contact us and we’ll reach out to you soon.

COVID-19 Retirement Impact: Early Withdrawals and Reduced Contributions

by LizStevens | Aug 26, 2020 | Blog

COVID-19 retirement impact: early withdrawals and reduced contributions. How employees are using their retirement savings during the coronavirus pandemic.

Retirement savings were identified as a source of financial relief in the thick of the coronavirus pandemic when the CARES Act expanded distribution options and favorable tax treatment for up to $100,000 of coronavirus-related distributions from eligible retirement plans.

Luckily, only 2.8 percent of employees made an early withdrawal during the first half of the year, according to research by the Investment Company Institute.

“We see a slight increase in withdrawal activity following the onset of economic volatility and hardship, but the increase is much smaller than you might expect, given the severity of the COVID-19 economic downturn,” said Sarah Holden, ICI senior director of retirement and investor research.

Retirement contributions, however, weren’t as fortunate. Over half of employees changed their retirement contributions or plan to do so soon, with 23 percent already contributing less, according to research by MassMutual.

COVID-19 Retirement Impact: Early Withdrawals and Reduced Contributions

Employees told MassMutual these are the primary reasons they’re making changes to their retirement contributions:

54 percent reduced contributions to have more cash on hand
22 percent plan to contribute more to take advantage of market fluctuations
24 percent plan to contribute the same amount but change their risk exposure

Nearly 40 percent of employees recognize that they need to make saving for an emergency a priority because they found themselves unprepared for the pandemic. Reducing retirement contributions could allow them to start building the emergency savings funds they need.

Another survey by Freedom Debt Relief at the start of the coronavirus pandemic highlighted the financial obligations employees were most concerned about:

45 percent worried about missing rent or mortgage payments
38 percent worried about missing utility payments
30 percent worried about missing health insurance premiums or student loan payments
36 percent worried about carrying a balance on their credit card for groceries
21 percent worried about carrying a balance on their credit card for utilities
18 percent worried about carrying a balance on their credit card for TV/Internet

Reducing retirement contributions can help employees catch up on missed payments and halt excessive credit card use, but it comes at the expense of their plans for retirement.

COVID-19 Retirement Impact: Retirement Outlook

A whopping 70 percent of employees report that the pandemic has made them more pessimistic about their retirement plans, according to research by The Alliance for Lifetime Income. That percentage is more harrowing when it’s considered that the survey sampled those with a minimum of $100,000 in assets. Only 33 percent of them are confident they’ll have enough to cover all their expenses in retirement and 20 percent have decided to retire later than initially planned.

Financial Stress and How Best Money Moves Can Help

Employees at every career stage are experiencing unprecedented levels of financial stress during the coronavirus pandemic. They need help navigating the financial challenges the crisis has presented and they need guidance to help them get back on track to reach their financial goals.

Best Money Moves is a mobile-first financial wellness program with the knowledge and support employees need to help them reduce their financial stress and live their best financial lives. It has a library of over 700 calculators, articles and videos as well as a budgeting tool that does the math to tell workers what their neighbors are spending in the same category. Plus, Best Money Moves is gamified, featuring a point-based rewards system where users earn points every time they log in, work with their budgets, read articles and measure their stress. Each point translates into a chance to win a monthly contest.

Sign up for a demonstration here to learn how Best Money Moves can bring financial wellness to your company.

Coronavirus: Early Retirement Withdrawals and Savings by Generation

by LizStevens | May 27, 2020 | Blog

Coronavirus: early retirement withdrawals and savings by generation. New research examines how the COVID-19 pandemic has impacted retirement planning.

Initially, the coronavirus pandemic highlighted how unprepared people were for a financial disaster, putting a spotlight on the lack of emergency savings and an overreliance on credit cards. New research shows COVID-19 has also had a significant impact on long-term financial planning.

The majority of workers (52 percent) now expect to work past age 65 or don’t plan to retire at all, according to a new study by the Transamerica Center for Retirement Readiness. In light of the coronavirus pandemic, 23 percent of workers say their confidence in their ability to retire comfortably has declined.

“The long-term implications of the coronavirus pandemic and recession on retirement security have yet to be fully realized,” said Catherine Collinson, CEO and president of Transamerica Institute® and TCRS. “However, the financial vulnerabilities among workers across all generations are becoming clear.”

Coronavirus: Early Retirement Withdrawals and Savings by Generation

Millennials Retirement Withdrawals, Savings and Financial Stress

22 percent of Millennials have already taken out a loan and/or early withdrawal.
20 percent plan to take out a loan and/or early withdrawal.
Millennials have an estimated median of $23,000 saved for retirement.
26 percent of Millennials have student loan debt.
Millennials have saved an estimated median of $3,000 for emergencies.

Generation X Retirement Withdrawals, Savings and Financial Stress

15 percent of Gen Xers have already taken or plan to take out a loan and/or early withdrawal.
Gen Xers have an estimated median of $64,000 saved for retirement.
52 percent of Gen Xers have credit card debt.
Gen Xers have saved an estimated median of $5,000 for emergencies.

Baby Boomers Retirement Withdrawals, Savings and Financial Stress

10 percent of Baby Boomers have already taken or plan to take out a loan and/or early withdrawal.
Baby Boomers have an estimated $144,000 saved for retirement.
25 percent of Baby Boomers are debt-free.
Baby Boomers have saved an estimated $15,000 for emergencies.

“Although our research paints a sobering picture, it also surfaces some opportunities that can help mitigate the negative economic effects of the pandemic and improve retirement prospects,” Collinson said.

Providing financial wellness benefits, offering flexible work arrangements and on a larger scale, collaborative efforts with policymakers and industry leaders can increase awareness of relief programs like unemployment insurance and alert employees to potential alternatives to making early withdrawals from retirement accounts.

“Workers’ ability to achieve a secure retirement highly depends on a robust employment market, the availability of retirement, health, and welfare benefits, the preservation of safety nets such as Social Security and Medicare,” Collinson said. “Even amid the pandemic and current hardships, we are presented with an opportunity to come together to reimagine our world — including how we live, work, retire, and age with dignity.”

5 Retirement Challenges for Older Employees

by LizStevens | Oct 23, 2019 | Blog

5 retirement challenges for older employees. New research highlights housing inequality on top of other barriers to retirement readiness.

A recent survey by Transamerica found nearly 70 percent of Baby Boomers expect to work past age 65 or don’t plan to retire at all. More than 80 percent of them say their decision to stay in the workforce is financially motivated.

Older employees are facing considerable financial challenges as they approach retirement. Homeownership rates are lower and debt rates are higher for older workers aged 50 to 64, as compared to earlier generations, according to research by the Joint Center for Housing Studies (JCHS).

“The falloff in homeownership rates among those approaching retirement, and the elevated levels of mortgage debt among those who do own, is concerning,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies.

The dip in homeownership rates and the spike in mortgage debt is just the tip of the iceberg sinking older employees’ timelines for retirement. Older workers are paying off credit cards and student loans, providing financial support for grown children, becoming caretakers for aging relatives and struggling to save for emergencies, let alone retirement.

5 Retirement Challenges for Older Employees

Click through the slideshow below for some fast stats on five of the biggest retirement challenges older employees are facing on top of housing inequality:

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How Employers Can Help Older Employees Get Ready for Retirement

More than 60 percent of Baby Boomers feel like they don’t know as much about retirement investing as they should and almost as many of them (55 percent) would like more education and advice from their employers on how to reach their retirement goals.

Financial wellness programs, like Best Money Moves, give employees personalized tools to help them better manage their money, pay off their debts, build their savings and plan for retirement. Best Money Moves provides practical, unbiased help to make it easier for employees to solve financial problems quickly and easily. And, for employers, less financially-stressed employees translates into a happier, healthier and more productive workforce.