You may already be familiar with the statistics illustrating the lack of financial wellness across a disproportionate number of American citizens. Here are just a few.
63% of Americans live paycheck to paycheck.1
39% of Americans would not be able to cover a $400 emergency.2
72% of Americans worry about personal finances while at work.3
These numbers and related data have been circulated so prevalently that their significance is often lost, but financial vulnerability remains a starkly concerning issue.
The COVID-19 pandemic has compounded many of these financial problems and shown the glaring lack of financial independence of many Americans. At the same time, the pandemic’s impact on personal finances has reemphasized the importance of financial wellness—a prerequisite to financial independence.
Financial wellness can be defined in many ways given how encompassing of a concept it is. A simple definition is the ability to have a healthy financial life in the present and in the future.
Fortunately, the idea of financial wellness as an interconnected element of retirement planning has gained traction in recent years and has led to an increase in financial wellness solutions with an expanding suite of tools and resources. Equally as encouraging is the growth of these solutions being implemented as an employee benefit through workplace financial wellness programs—see Financial Finesse, as an example.
A holistic and results-driven financial wellness program will include educational tools and resources focusing on emergency savings, debt management, budgeting, personal insurance, and integrating employee benefits into a personalized wellness plan. This best practices guide by Financial Finesse offers a deep dive into a well-run wellness program. The overarching intent is to help employees build a strong financial foundation and successfully achieve a state of financial wellbeing—in doing so, an employer creates a culture of care and support.
If you are a plan advisor or plan sponsor, now is a good time to start a conversation with your retirement plan service provider about developing a financial wellness strategy for employees. The timing is apropos. The beginning of a new year offers a “starting fresh” mindset and January is #NationalFinancialWellnessMonth, providing a great tie-in for financial wellness communications and announcements.
Here’s to better health and better wealth in 2021!
1. Highlands Solutions survey
2. Federal Reserve Board’s 2018 Survey of Household Economics and Decisionmaking
3. John Hancock’s Financial Stress Survey