Workers seeing financial wellness benefits as a ‘must-have,’ study finds

Workers are increasingly seeing financial wellness benefits as a 'must-have,' according to findings in Vestwell's annual Savings Industry Report.

“Employees are increasingly viewing financial-wellness offerings as a ‘must-have’ in today’s workplace environment. With inflation fears and uncertain economic outlooks affecting retirement goals, employers and advisors have a huge opportunity to enhance their offerings beyond the traditional 401(k),” said Aaron Schumm, founder and CEO of Vestwell.

According to the report, the results illustrate the future of financial wellness and workplace savings —and how employers and financial advisors can align their offerings with evolving employee priorities.  Over 1,200 employees were surveyed to understand saving habits, evolving benefits preferences, and challenges that savers are experiencing.

Benefits highlights from the survey

The following are some of the findings from the report:

Workplace-retirement benefits are expected. According to the survey, employees are increasingly expecting retirement offerings from their employers:

• 85% of respondents expect their employer to offer retirement benefits.
• 89% of those surveyed would be more likely to continue working for an employer that offered a retirement benefit.

Workplace education-savings benefits are gaining momentum. Savers increasingly look for employers to offer expanded financial-wellness offerings.

• 93% of survey respondents with student loans reported that their student debt has affected their ability to save.
• 74% of those with student loans agree that they would be more likely to continue working for an employer that offered student loan-related benefits.
• 73% placed some level of importance on having a 529 Education Savings Account in their workplace benefits package.

“The student debt crisis continues to create barriers for Americans looking to save for retirement. By offering the latest savings solutions to their employees, employers can enhance retention and employee wellbeing,” added Schumm. “If we want to help people save for retirement, we must also provide holistic financial wellness benefits that reduce these barriers to savings.”

Vestwell conducted a series of surveys in the summer and fall of 2023 to understand how Americans save and what they’d like to see from employer-sponsored retirement programs. To learn more about the report, please visit our website. Vestwell is an employer and individual savings platform.

Paying down debt, boosting retirement savings

In recent years, several companies have implemented programs designed to help employees struggling with boosting their retirement savings while reducing student debt. A case in point is Fidelity Investments, which said that it has recently introduced a benefit aimed at addressing the growing pressures of student debt – Student Debt Retirement.

“Student debt is a barrier that prevents so many Americans from participating in important life milestones – particularly saving for retirement,” said Jesse Moore, senior vice president, head of Student Debt at Fidelity Investments. “The introduction of a retirement-focused student debt benefit is a game-changing step forward for the benefits industry that will help millions on their path toward financial wellness and mobility.”

The benefit, made possible through the passage of SECURE 2.0, allows employers to use money already allocated for retirement plans to help employees save for retirement while paying down student debt, Fidelity said. Employers continue to benefit from tax advantages, while providing their employees relief in paying down student debt and saving for the future. The benefit is put into practice when the employee makes a student debt payment. Their employer will then match a percentage of that payment in the form of a retirement plan contribution – allowing the employee to continue saving for retirement when they otherwise may not have been able to contribute.

According to Fidelity data, participants enrolled in a student debt retirement benefit are projected to nearly double their 401(k) balances as well as double the retirement expenses they can cover by the time they retire. In the year ahead, Fidelity said that it anticipates providing access to student debt benefits, including student debt retirement, for more than 1.2 million Americans. Participants are projected to double their projected retirement balances from $195,248 to $389,371 by participating in the Student Debt Retirement program. Additionally, they are projected to double the amount of retirement expenses they can cover from 7.5% to 15%.

Advantages of student debt-repayment programs

Since federal student-loan payments resumed last October, student debt-repayment benefits have increasingly played a role in attracting and retaining talent, as well as improving employees’ financial well-being, Fidelity said. In fact, the company’s research (Fidelity 2021 Employee and Employer Value of Benefits Research) finds that employees consider student debt assistance the top benefit contributing to their financial well-being.

Additionally, retirement trend data from Fidelity’s student debt tool3 shows that many student loan borrowers used the federal payment pause to focus on retirement savings, with 72% of student loan borrowers contributing at least 5% to their 401(k), compared to only 63% prior to the payment pause.

Employers are also recognizing the positive impact of student-debt benefits and the significant influence they can have on retirement savings, the Fidelity survey said. Industry research (2023 EBRI Financial Wellbeing Employer Survey) shows that 67% of employers either already offer student loan debt benefits or intend to introduce them in the next one to two years.

For more information about employer student loan benefits and to help borrowers manage their student loan payments, Fidelity has assembled several resources,

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.