Employer-provided financial wellness programs have a measurable affect on employees’ retirement readiness, according to a recent study by U.S.-based think-tank Financial Finesse Inc.
When employees repeatedly engage with programs, their financial well-being moves from four to a six on a 10-point scale, which correlates with a 38 per cent increase in the amount they contribute to their retirement savings. Further, as they engage with these programs, the age at which they can retire and still replace 80 per cent of their income drops from 68.9 to 66.9. The study calculated that these results, if seen across a workforce of 50,000, would result in savings of US$65 million for an employer.
Younger employees see a more significant impact from financial wellness programs when they start earlier, with those under age 35 seeing a lower (2.6 years on average) expected retirement age as a result. Older employees also see an effect, with one year, on average, shaved off their projected retirement date.
Liz Davidson, Financial Finesse’s chief executive officer, noted in a press release that improvements in employees’ retirement outcomes correlate positively with continued use of financial wellness programs, so employers should strive to keep workers actively engaged over time. Programs should also be specifically tailored to a given employee population in order to have the most impact, she added.