What Do You Mean When You Say Financial Wellness?

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Reducing employees' financial stress is the easiest way to increase productivity. Chief Financial Officers and Human Resources Officers come across a myriad of Financial Wellness solutions that all profess to be the best the world has to offer. Choosing the right solution or the right combination of solutions is a daunting task. This VIEWPOINT is designed to guide the reader through the evaluation of solutions available to build the right program for their situation. Many employers turn to their plan advisor and to their retirement plan service provider to vet or curate content of financial wellness programs for their workforce. Your plan advisor and service providers are best positioned to help you discern what is right for your business. This paper, the first in a series the Council will publish in 2020 seeks to support decision making with respect to:

  • The scope of services to request, and
  • How services are delivered

Position Paper

Retirement Readiness: Consensus on a Course of Action

viewpoint-ret-readyThe Position Paper concludes that for many, target income replacement ratios should be higher than the 70-75% conventionally accepted as a rule of thumb. The higher ratio is to account for the projected cost of healthcare in retirement, and traditional financial planning concerns such as personal health, children education needs, and the cost of caring for elderly relatives. Regardless of target income ratio, the six panelists call for consistent contribution levels in the range of 10% to 16% of pay over a 30‐year or 40‐year career. To measure retirement readiness, the panelists suggest a two-prong approach: one measure based on income replacement ratios for younger participants with a decades‐long horizon to retirement, and a different set of measures for those with limited savings and a shorter timeframe. The Position Paper also touches on the type of tools most impactful on participant behavior. When it comes to automatic enrollment, the six panelists advocate for a default deferral election in the range of 6% to 10% that far exceeds the 2% to 3% many employers adopt out of fear of disruption, which experience suggest is unfounded.

Position Paper