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Demand for Employer Financial Wellness Benefits Remains Strong

Practice Management

The 401(k) and matching programs are still the most highly sought-after benefits — yet with financial pressures on the rise, employees are craving financial stability above all and are looking towards their employers for more support than ever, a new survey finds.

Betterment at Work’s 2022 Financial Wellness Barometer polled 1,000 full-time U.S. employees to measure how employees are faring financially, the benefits they desire most in the current climate, the type of support they want their employers to offer, and how these trends have shifted year-over-year.

Expectations for Employers

It found that 93% of respondents say it's at least “somewhat important” that their employer provides financial wellness benefits, and 68% indicated that financial wellness benefits are more important to them now than they were a year ago. 

How are companies measuring up? Less than half (45%) of employees agreed that their employer was committed to supporting their financial wellness. That said, the level of perceived commitment varies by company size. While roughly half (52%) of midsize and (48%) large business employees feel their employer is committed to supporting their financial wellness, nearly two-thirds (63%) of small business workers do not. 

Moreover, only 39% of small business employees stated that their employer offered a 401(k), compared to 52% of midsize and 64% of large business employees, signifying room for greater 401(k) adoption amongst SMB employers, the report notes. 

Financial Challenges

As to how employees are faring financially, the findings suggest that employee financial wellness is on a downward trend. Three-quarters (75%) of employees say that market volatility has impacted their retirement account’s balance, and over a quarter (28%) tapped their retirement savings to pay for short-term expenses this year. “This is a significant and worrisome number,” the report notes, emphasizing that retirement savings should be tapped only in dire scenarios.  

Still, while volatility and inflation have impacted their 401(k)s, the findings also show that they’ve had less of an impact on their approach to retirement planning — 48% said volatility and inflation had a moderate-to-significant impact, while 45% said the factors had little to no impact. 

Meanwhile, financial challenges are impacting people’s mental health and their ability to do their jobs, the report further observes. Roughly 7 in 10 (71%) say their finances cause them anxiety, and more than half (54%) of employees say this anxiety has made it difficult to focus on work.

Inflation and student debt are major causes. In this case, 88% say that rising costs of living have notably increased their financial anxiety this year, and nearly three-quarters (71%) reported feeling financial anxiety regarding their student loan debt. In fact, two-thirds (67%) of respondents feel that their student debt has impacted their ability to save for retirement.

Job Hoppers and Financial Benefits 

All in all, there’s an opportunity for employers across the board to do more, the report suggests. To do so, employers will need to provide the benefits that employees want most. To that end, more than half (54%) would be enticed to change jobs if the prospective employer offered better benefits than their current employer, including 57% of fully in-office workers, 55% of hybrid workers, and 44% of fully remote workers.

Not surprisingly, the 401(k) remains the king of all benefits, as a 401(k) and 401(k) match remain the two most highly sought-after financial benefits. “We specifically see a desire for 401(k) matching programs, likely indicating that a significant number of respondents have access to a plan but no employer match,” the firm notes.  

Employer-sponsored emergency funds, flexible spending accounts (FSAs) and health savings accounts (HSAs), and wellness stipends also register as distinctive benefits that could motivate workers to jump ship. Another stand-out is demand for student loan support, including matching programs, financial assistance, or other repayment tools. 

According to the findings, here are respondents’ top answers when they were asked what benefits a prospective employer could offer that would entice them to leave their job: 

  • 401(k) matching program (57%)
  • A 401(k) or other retirement plan (51%)
  • An employer-sponsored emergency fund (47%)
  • FSA or HSA (32%)
  • Wellness stipend (31%)
  • A student debt/401(k) matching program (30%)
  • Budgeting and savings tools (25%)
  • Student loan financial assistance or repayment programs (18%)
  • Childcare support (14%)

Younger generations feel the strongest about benefits, as 63% of Gen Z would leave their current job for better benefits at a new job, compared to only 41% of Boomers. Also notable is that the survey didn’t find many significant differences between benefits that would most entice in-office, hybrid and remote workers. 

“This presents an opportunity for employers to reexamine their benefits packages and gauge whether their current offerings are truly meeting the evolving needs of employees,” emphasizes Kristen Carlisle, General Manager of Betterment at Work. She notes, for example, that in looking at employee retirement readiness, it’s evident that greater employer support and guidance is needed. “A significant portion of workers had to tap their retirement accounts to pay for short-term expenses, pointing to a notable lack of emergency funds. Two-thirds said their student debt has impacted their ability to save for retirement — and on top of that, nearly half of employees still don’t have access to a workplace retirement plan,” observes Carlisle. 

“As employers evaluate how they can best support employees’ near-term and long-term savings goals, offering a 401(k) should be the baseline but not the stopping point. The good news is high quality benefits packages are no longer expensive and out of reach, no matter your company’s size,” she further notes.  

The survey was conducted from Oct. 7–12, 2022, among 1,000 adult respondents who are full-time employees. The sample of respondents was provided by research panel company Market Cube.