retirement Archives

What Percentage of Americans Spend More Than They Earn?

by LizStevens | Oct 3, 2018 | Blog

What percentage of Americans spend more than they earn? Recent research looks at spending habits, debt, retirement security and how close or far Americans are from achieving financial wellness.

More than half of Americans spend more than they earn, according to recent joint research by the Association of Young Americans (AYA) and AARP.

Almost 50 percent have credit card debt, more than 40 percent have a mortgage or a car loan and over 30 percent have student loan debt. Close to half of them have nothing saved for retirement. The 70 percent of Americans that consider their level of debt to be problematic are right to be worried.

“As we look into the future, financial and retirement security is going to be a concern for all of us,” says AARP Senior Vice President Jean Setzfand.

The most striking finding from AARP’s report is that there isn’t as much variance on financial security by generation as is commonly thought. In particular, student loan debt has similarly affected each generation’s ability to save for retirement and life decisions, not just Millennials. Student loan debt has kept roughly 30 percent of Millennials, Gen Xers and Baby Boomers from buying a car or house. It’s kept 40 percent of Millennials and Gen Xers and 30 percent of Baby Boomers from savings for retirement. Student loan debt has kept 25 percent of Millennials and 20 percent of Gen Xers and Baby Boomers from moving from their current residence. Student loan debt is making it harder to achieve the American dream across generations.

Survey results also showed that Americans are willing to learn. Over a third sought advice from a professional financial advisor and close to 80 percent believed such advice would be very or somewhat trustworthy. This is encouraging for employers who offer or are considering offering financial wellness programs. Employees who engage with financial wellness benefits are likely to trust the program, and ideally, apply the advice from it to improve their financial situations.

“Across generations, economic concerns and financial security are a top priority for Americans,” says Ben Brown, founder of AYA. “These findings clearly indicate that all three generations care deeply about programs that ensure long-term financial success for individuals, families, and our nation as a whole.”

Financial Wellness Research Warrants Worry

by LizStevens | Sep 24, 2018 | Blog

Research from Prudential reveals just how far Americans are from reaching financial goals, like having enough savings to get through retirement years, as well as how optimistic or pessimistic they are about their financial future.

More than half of Americans believe their financial wellness is below average based on their level of income, savings, assets and debts, according to Prudential’s first-ever Financial Wellness Census. Out of 22 common financial goals, most Americans only have two under control: staying in their home when they retire and keeping up with current expenses.

“Our relationship with money can affect our physical health, stress levels and state of mind, family dynamics and even our performance at work,” says Stephen Pelletier, executive vice president and chief operating officer of Prudential’s U.S. based businesses. “Only by listening can we truly learn what people need to help them get on the path to financial wellness and stay on the right track throughout their lives.”

Almost a third of Americans think they are better or worse off financially than they actually are. Nearly 20 percent perceive themselves to be in good financial shape despite having a low level of objective financial health. Over 10 percent of those with high levels of objective financial health are still pessimistic about their finances.

Respondents ranked having enough savings to last through retirement years and the ability to pay for future healthcare needs as the most important financial goals. Surprisingly, for more than 70 percent simply keeping up with current expenses is their primary financial focus.

Even though less than half of Americans are on track to achieve their financial goals, more than 50 percent are optimistic that they will eventually achieve them. Prudential’s report offers a reason for this positivity discrepancy, finding that working with a financial advisor correlates with a more positive outlook on financial health.

It’s not enough to offer retirement benefits if employees don’t know how to manage and grow their 401(k) (or finances in general). “The journey to financial wellness is deeply personal,” says Niharika Shah, Prudential Financial’s vice president of brand marketing. Financial wellness benefits that include personalized support features help employees learn more about improving their financial health, reduce their financial stress and bring them closer to achieving their financial goals.

What Does Financial Wellness Look Like for Women?

by LizStevens | Sep 7, 2018 | Blog

Pay equity is a huge barrier to women’s financial wellness in the workplace, but it isn’t the only one. Most women haven’t used retirement calculators and don’t have backup plans if forced into retirement. They’re not going to ask for help, but employers who provide the right tools can help them help themselves.

Everyone knows: Women make up 46.8 percent of the American labor market, but they still earn an average of 20 percent less than men in the same position. Pay isn’t equitable by any stretch of the imagination.

Even in situations where women and men are offered the same job, women are initially offered salaries up to 45 percent less than what men are offered, according to research from Hired. Hired’s research underscores how critical it is for women to advocate for themselves in negotiations until legislation and corporate policies better support pay equity.

Pay equity isn’t the only issue women face when it comes to financial wellness. Research from Transamerica Center found that less than 10 percent of women have used a retirement calculator and barely 20 percent had a backup plan if they were forced into retirement sooner than expected, either because of job loss, health issues or family obligations.

Why? An argument posed in a MarketWatch article claims that “societal norms and cultural messages undermine [women’s] ability to gain financial literacy and investment expertise.” Research shows that for women, finances, especially issues with personal finances, are generally associated with emotions of embarrassment, shame and fear. Even if women know they need to be more financially literate, they might not ask for help in gaining the knowledge.

Companies know they have a serious problem when it comes to women, pay equity and financial wellness. While both men and women feel financial stress, women feel higher levels of it. And, it causes more complications in their work lives.

That’s where there’s an opportunity for employers to help. Employer-sponsored financial wellness programs like Best Money Moves can bypass cultural barriers and social norms to give women access to the tools they need to measure their financial stress, learn how to manage their money around issues ranging from student loans to mortgages, elder care to relationship issues, and get on track with saving for retirement. The best part about employer-sponsored financial wellness programs is that it takes away any shame or embarrassment associated with asking for help and simply provides the best tools for employees to help themselves.

Employers might also consider adding policies that pledge equal pay for equal work, especially if they’re in the process of recruiting more women. And with unemployment at 3.9 percent (nearly an all-time low), it doesn’t hurt to work on policies that will attract a demographic that makes up nearly half of the workforce.

Best Money Moves Founder/CEO Ilyce Glink will be giving her expert insight on this topic at the “Women, Pay Equity and Financial Wellness” panel at the 2018 HR Technology Conference in Las Vegas on Tuesday, September 11 at 10:30 AM.

Best Money Moves will be at the 2018 HR Technology Conference in Las Vegas this September 11-14. Stop by booth #753 to learn how you can improve your company and your employees’ financial health.

Do You Know How Unprepared Employees Really Are?

by LizStevens | Aug 28, 2018 | Blog

Long-term healthcare is expensive and although most Americans will need it, it’s surprising to know how unprepared employees really are.

Long-term healthcare is a tough topic to discuss because it forces people to confront their mortality, but new research from Moll Law Group underscores the importance of saving for the costs of long-term care, like a nursing home or assisted living.

More than 60 percent of Americans have nothing saved for long-term care. Why? Less than half of Americans think they’ll need it. Unfortunately, 70 percent of Americans will.

That means there are millions of people that are seriously unprepared for future healthcare expenses and some of them are your employees.

Housing costs for long-term care are astronomical. Average costs for assisted living are $45,000, semi-private nursing homes are $87,775, and private nursing homes are $97,455. These housing costs are a far stretch from the $25,000 in savings Americans thought would be enough to cover long-term care.

This isn’t just a crisis for the future, it’s a concern many face presently. A new survey from Bankrate found that “For younger baby boomers (ages 54 to 63), money is the top concern keeping them up at night. Thirty-nine percent say financial worries occasionally keep them from falling asleep.” Younger baby boomers are wrestling with high costs for education, housing, and they have aging parents to worry about. All of these factors pull them further from their retirement goals and increase their financial stress.

The process and associated costs of aging don’t need to be unexpected, but often (at least for half of those surveyed by Moll Law Group) the decision to place a loved one in long-term care is unexpected. Although there’s no knowing if or when it will happen, by understanding the likelihood and estimated expenses families can make the right decision without as much financial strain

It’s time to stop avoiding the inevitable and start preparing for unfortunate events that are likely to happen later in life. Employers should encourage employees to contribute to their 401(k) program and offer an employee match. It’s worthwhile to re-approach healthcare and retirement plans to see where employers can better help employees tackle the incredible cost burdens they, or a close family member, will most likely encounter.

10 Quick Highlights from SHRM’s 2018 Benefits Report

by LizStevens | Aug 21, 2018 | Blog

SHRM’s 2018 employee benefits report is out and we’ve got the top 10 highlights on topics like healthcare, retirement, paid leave, and wellness programs.

Society of Human Resource Management (SHRM)’s 2018 Employee Benefits report is here just in time for National Wellness Month!

Here are our quick 10 takeaways:

Healthcare is Essential. An impressive 95 percent of companies with less than 50 full-time employees provide some form of healthcare coverage even though they aren’t obligated to.
Keep it Casual. More than 60 percent of organizations offer casual dress benefits. The most popular benefit is one day per week when employees are welcome to “dress down.”
Referral Rewards. Employee referral bonuses increased by 10 percent (to 51%) since 2014. Low unemployment and tight competition makes it that much harder to find quality hires, so why not reward great employees for great referrals?
Investment Retirement Advice. Over half of organizations offer either one-on-one or online investment retirement advice to their employees to help reduce stress concerning retirement readiness.
Wellness Challenges Work. Companies hosting competitions and challenges grew 10 percent over the last year. Competitions and challenges can be effective tools to increase engagement with wellness benefits.
Flexibility Bonus Benefits. Flexible work arrangements are a win-win. Employees experience a better work-life balance. Employers get a reduction of “real estate” costs and are better suited to match customer demands of a 24/7 culture.
Tech Benefit Trends. More than half of organizations offer company-owned smartphones for business and personal use. Surprisingly, almost 20 percent of companies offer free computers for employees’ personal use.
Smoking Costs. Nearly 20 percent of organizations charge a higher premium for healthcare coverage of employees who smoke because of the numerous health risks smoking poses.
Unused Paid Leave. Employees fear falling behind, don’t believe anyone else will step in while they were away, or want to show how dedicated they are to their job. Encouraging employees to use vacation time may reduce turnover and its associated costs.
Stress Management Matters. Stress can be detrimental to productivity, and there’s no shortage of things for Americans to stress about, so it makes sense that companies offering onsite stress management programs as a benefit tripled over the past 5 years.

Effective wellness benefits lower stress, create a better work-life balance and give employees the chance to relax on their off time so they return with higher job satisfaction and improved productivity. Take advantage of National Wellness Month as an opportunity to review your current wellness plan and determine what the best benefits are for your employees.