EL SEGUNDO, Calif., Nov. 14, 2018 /PRNewswire/ -- Financial Finesse's Financial Wellness Think Tank released new research today quantifying the improvements in employee retirement preparedness which generate ROI for an employer by reducing the costs of delayed retirements. Special Report: The ROI of Improving Employee Retirement Preparedness found that for a 50,000-employee company, this could lead to a savings of $65 million or more per year.
Major findings from the ROI predictive model include:
Repeated engagement with financial wellness programs that improves average workforce financial health from a 4.0 to a 6.0 (on a 10-point scale) increases employee retirement plan contribution rates by a factor of 38% from original rates.
The projected average workforce age at which an employee could retire and replace 80% of their income drops 2 years, from 68.95 years to 66.96 years.
When applied across a total workforce of 50,000 employees, that reduction in average retirement age could generate powerful employer savings of over $65 million.
Reductions in retirement age occur across all career stages, with employees under 35 seeing the largest reduction (2.67 years) and older employees still seeing a reduction of 1 year. This suggests that comprehensive financial wellness programs which repeatedly engage employees can be effective in mitigating current costs of delayed retirement, as well as future costs.
Even modest improvements in employee financial wellness generate meaningful savings. An improvement of the average workforce financial wellness from 4.0 to 5.0 (on a 10-point scale) leads to a 17.85% increase in retirement plan contribution rates, reducing the average projected retirement age by 1 year. This could generate over $33 million in savings from reducing delayed retirements.
Liz Davidson, CEO, who founded the nation's first unbiased financial wellness firm in 1999, said that quantifying the cost savings from improved retirement preparedness enhances the firm's original predictive ROI model, recognized by Society of Actuaries in 2017 with a first place award. The patent-pending model is in use at hundreds of organizations and has become the industry standard to determine efficacy of financial wellness programs.
Davidson noted that improvements in employee financial wellness are incremental, and increase with the number of interactions, so companies should focus on creating multiple channels to reach employees and engagement techniques which encourage them to keep coming back.
Think Tank Director Greg Ward, CFP®, said that the financial wellness program repertoire for increasing retirement preparedness and decreasing delayed retirements included an easy-to-use retirement calculator, auto-enrollment, auto-escalation, and 1 x 1 financial coaching. "Financial wellness programs that include financial coaching help employees break through blocks to retirement savings by tackling debt and student loans, managing cash flow and navigating important life goals like marriage, parenthood and home ownership," he explained. "Results are cumulative and interact with each other, so the longer a company has a holistic financial wellness benefit in place, the more workforce financial wellness shifts."
Davidson's guidance for large companies considering implementing a workplace financial wellness benefit is to start with a workforce financial wellness assessment to customize the program for specific workforce demographics and vulnerabilities. She recently created the nation's first online CE course on creating an effective financial wellness program on FidiciaryEducation.com, which offers HR and financial professionals guidance for implementing a program which changes employee financial behaviors and delivers ROI on a broad scale.
Financial Finesse is the largest independent provider of unbiased workplace financial wellness programs in the country, delivering holistic financial coaching and guidance that helps employees improve their financial wellness. The firm's programs cover every area of financial planning and cost employees nothing out of pocket since they are fully paid for by their employers. Financial Finesse's programs are proven to change lives, provided through a variety of channels such as mobile financial coaching, live events, interactive webcasts, one-on-one financial counseling sessions and a financial helpline staffed by Certified Financial Planner™ professionals who do not sell any financial products or manage assets. www.financialfinesse.com.