Retirement Benefits Moving Beyond Just a Retirement Plan

Holistic retirement programs, which include financial wellness, health and voluntary benefits, put employees in a better position to reach their long-term goals.

Employers are increasingly offering retirement benefits that focus on financial success in all areas of employees’ lives and include much more than the core retirement plan.

These holistic retirement programs can include help with emergency savings; counseling on debt relief, including credit card and student loan debt; college savings 529 plans; health savings accounts (HSAs); disability and life insurance; and budgeting, “to help employees gain greater control of their savings and spending habits,” says Matthew Eickman, national retirement leader at Qualified Plan Advisors.

“In the past five to seven years, plan sponsors have begun to realize how complex it is for their employees to manage all of their investing and financial goals,” says Chris Ceder, retirement strategist at Goldman Sachs Asset Management.

Eric Levy, executive vice president at AIG Retirement Services, agrees that “how people manage their financial balance sheet has become more complex.”

Ceder adds: “Employers have also come to realize that their workers will not be able to save for retirement if they don’t first address other pressing goals that seem much more relevant to their workforce—like saving for a home, paying down a mortgage, elder care, budgeting, or paying down student debt. For the majority of their workers, retirement is far off. Offering a comprehensive financial wellness program builds workforce resiliency and results in a more resilient organization.”

Suzanne Schmitt, vice president, financial wellness, at Prudential, says a holistic retirement program should include “an objective assessment of workers’ financial wellness through a gauge of how well an individual is managing their day-to-day finances, protecting against key risks and saving for major goals.” She adds that financial wellness benefits “should then point them toward relevant next steps than can increase their financial health and retirement readiness.”

Plan sponsors should offer “unbiased education and tools on a wide array of topics, including managing daily finances, debt mitigation and life events, like caregiving, saving for a home or reducing debt, particularly student loan debt—delivered digitally and through seminars and webinars,” Schmitt says. “The tools could include one for budgeting, another to help calculate life insurance, and yet another to help calculate retirement income.” She notes that 17% of people who use Prudential’s retirement income calculator increase their contributions on the same day.

Schmitt adds that it is also important for a holistic retirement program to offer employees access to financial wellness coaches who can provide one-on-one support on retirement planning, emergency savings and more. She says it is helpful to allow individuals to invite their spouses, partners and children to participate, to make it a financial conversation for the whole family.

Mark Smrecek, senior director and financial well-being market leader at Willis Towers Watson, agrees that one-on-one counseling should be at the center of a sound holistic retirement program, as it is the most effective way to help individuals get their financial houses in order. “The counseling should extend outside of the wealth building space, which means looking at individuals’ current finances to help them with their day-to-day cash management. That will then put them in a better position to support their long-term goals, including retirement savings.”

Schmitt notes that a truly holistic retirement program should include “access to a guaranteed income solution. This is critical in helping participants convert their retirement savings into a steady, predictable income stream in retirement.”

For those plan sponsors who are just getting started in designing and offering a holistic retirement program, Schmitt says, a good place to begin is to get an overview of the health of their retirement plan. Later this year, Prudential will be rolling out such a tool, called Plan Health 360. “It will leverage data, science and actuarial insights to evaluate the health of an employer’s plan, including those benefits held away from Prudential, to get a 360-degree view of the total benefits offering,” she says. “It plays back personalized recommendations that will help plans improve organizational and individual wellness with actionable insights. An assessment like this is a great way for plan sponsors to get an objective view of their plan’s health and identify potential ‘gaps’ like guaranteed income or student loan assistance that, when closed, can help them achieve a more holistic retirement plan.”

Smrecek says there is an enormous need for holistic retirement programs, as more people today are living paycheck to paycheck than ever before. And he adds that the benefits of offering such a program are tremendous for companies, as they reduce absenteeism, increase workers’ productivity and lower health care costs.

Levy concurs on that point, saying, “More plan sponsors are now realizing the benefits to them of offering a holistic retirement program that empowers their employees to manage their financial affairs in a good, solid, long-term way that reduces their stress. A number of studies have shown that if people are under financial stress, it affects their work behavior and, potentially, other issues they bring into the workplace. Astute employers now understand that a taking a holistic approach to the mental, financial and physical wellness of their employees is important not just for their workers—but also for their bottom line. It isn’t enough to take a rifle-shot approach.”