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Prudential Research & Perspectives Our original research and thought leadership provide vital insights into important issues for our clients, financial professionals, policymakers, and the general public.

 

The Power of the Wellness Effect

The “American Dream,” a shared ideal founded on individuals’ ability to achieve financial prosperity and security, is, for many Americans, slipping out of reach. In a recent Prudential survey regarding U.S. consumers’ perspectives on financial wellness, only 22% of individuals described themselves as feeling financially secure. Building upon employers’ realization of the value of employees’ health wellness over the past decade, there is growing acceptance among employers that there is significant value in improving employees’ financial wellness.

What is financial wellness?

Financial wellness is realized when individuals adopt behaviors that help them achieve the foundational elements of financial security:

Managing
Day-to-Day Finances
Achieving
Important Financial Goals
Protecting
Against Key Financial Risks

What can employers do to help?

As long-standing providers of employee benefits, employers are viewed by employees as trusted partners who can help employees achieve financial wellness. Traditional workplace benefits programs are expanding to include new, complementary financial wellness approaches. Financial wellness programs focus on foundational financial issues, such as budgeting, debt management, saving and investing, and protecting against key financial risks.

What’s in it for employers?

When employees are financially well, employers benefit, too. Employers may be better able to advance their strategic business goals:

Increased
Employee Productivity
Optimized
Investments in Employee Benefits
Improved
Workforce Management
44% of employees worry about finances at work, and 46% spend two to three hours per week on personal financial matters at work.1 In 2012, employees withdrew $70 billion from retirement accounts before reaching retirement age. This equates to 59% of employers’ matching dollars contributed to those accounts that same year.2 44% of employees expect to retire later than planned.3 A one-year increase in retirement age costs employers about as much as paid sick and personal leave combined.4

 

Financial wellness programs can help improve employees’ financial security, thereby contributing to fewer distractions at work, reduced retirement plan leakage, and timely retirements, among other mutual benefits for employers and employees alike. When employers and employees are both better off, everybody wins. We call this “The Wellness Effect.”

How can employers maximize the effectiveness of their financial wellness programs?

Each employer has a unique business model and employee base, and, therefore, faces different challenges when implementing a financial wellness approach. Employers should design financial wellness programs that are informed by insights into the unique financial needs of their employees, successfully educate and engage employees, and help employees take concrete actions to improve their financial health. We encourage employers to discuss financial wellness with their benefit consultants or advisors.

Download The Power of the Wellness Effect: Seeing the Real Value of Employee Financial Health.


 

Prudential is a leading employee benefits provider with extensive experience and expertise in both retirement and group insurance benefits, and in utilizing data analytics to design benefit programs and drive constructive participant behavior.

 

 

1 Purchasing Power, “Financial Wellness: Addressing the ‘9 to 5’ Impact of 24/7 Financial Stress,” 2013.
2 HelloWallet, “The Retirement Breach in Defined Contribution Plans,” January 2013.
3 PricewaterhouseCoopers, “Employee Financial Wellness Survey 2016 Results,” 2016.
4 Prudential, with supporting research and analysis from the University of Connecticut’s Goldenson Center for Actuarial Research. A one-year increase in average retirement age, using national averages for private sector workers, results in an average annual incremental run rate of about 1%–1.5% of workforce costs.

 

 

 

The Prudential Insurance Company of America, Newark, NJ.

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