Get back on financial track: 5 tips to help employees regroup and recover

Man standing and holding a map as he gazes over the top of a mountain.

Everyone wants to forget 2020—but your employees may still be dealing with the financial fallout. In fact, 51% of non-retired adults say that the pandemic will make it harder to achieve their financial goals, according to a March survey by the Pew Research Center.1 Among those who report that their financial circumstances have worsened, 44% believe it will take them three years or more to get back on track, and 10% worry that their finances may never recover.

The concern is understandable. Over the course of the pandemic, many families experienced wage reductions, job losses or may have faced surprise expenses. To cope, people took on debt and reduced their savings or stopped it altogether. If your company adopted the CARES Act provisions, your employees may have taken coronavirus-related distributions from their employer-sponsored retirement plans to make ends meet. All of these actions were necessary during the crisis. But now, as we look to move toward recovery, your employees likely want to get back on financial track.

Fortunately, there are ways employers can help. From offering increased financial education to providing access to tax-advantaged savings vehicles, you can provide employees with support to help them resume savings and improve their financial wellness. As an added benefit, they may also feel much less stressed (that’s a perk you can’t underestimate). Here are some powerful ways to help get your employees back on track:

Ramp up your financial education initiatives

If you haven’t already, now is the time to provide employees with the education and resources to help them regroup financially. In a 2020 survey from PwC, 67% of employees said they seek financial help or guidance when they’re in a financial crisis or facing critical financial decisions.2 That’s a good descriptor of this year for many Americans.

Educational offerings such as Voya’s Get Back on Track campaign give your employees the information they need to navigate their finances and make smart decisions about their future. Through this campaign, we provide employees with actionable tools and resources to help them get organized and back on track. Additionally, they will have access to Voya Learn for live and on demand education sessions on a variety of financial wellness topics.

Match retirement contributions to encourage participation

Voya's research shows that by offering to match employee contributions to retirement, you can boost plan participation by up to seven percentage points.3 For employees who may have reduced or ceased their plan contributions in the past year, providing a match offers an incentive to get them saving for their future again. Matches also give employers a subtle way of recommending how much employees should save. Voya's research reveals that higher match caps correlate directly with higher employee savings rates.

Turn on retirement plan auto features

Often, the best kind of help is the kind you don’t have to ask for—it just shows up. And automatic features are designed to do just that. Features such as auto-enrollment, auto re- enrollment and auto deferral escalation help get your employees back on track automatically. The latter two (re-enrollment and escalation) are especially relevant now, as employees may have stopped savings or cut back on their savings. Consider that plan participants presented with automatic savings escalation adopt it at a rate of 65% compared to 12% of those who must decide to opt-in.4 You can help your employees get back on track by making it easier and automatic.

Provide an emergency savings solution

The recent crisis highlighted the need for emergency savings like never before. And people got the message. More than half of Americans say they’re more likely to save for an emergency now than they were before the pandemic. But it’s one thing to advise employees to save for emergencies and another to help them do so.

By implementing an emergency savings benefit, you can empower employees to create an emergency savings fund via automatic payroll deductions. Employers can also contribute to the effort. The funds are easily accessible to employees, and a savings solution may prevent them from tapping retirement accounts during a crisis. Voya's research shows that retirement plan participants with less than adequate emergency savings are 13 times more likely to take a hardship withdrawal from their retirement account.5

Take advantage of managed accounts

As employees plan to get back on track, they may benefit from a little more guidance. For example, employees nearing retirement might want additional support in planning, especially if they took a financial hit over the past year. This is where managed accounts can make the difference. Managed accounts provide employees with individual investment advice, retirement income planning, and payout strategies. Backed by personalized guidance from a financial advisor, managed accounts are tailored to each employee’s specific needs. Employers can utilize managed accounts to provide employees with advice, planning tools, and one-on-one assistance that answers their questions and serves their specific needs.

Last year was challenging, to say the least. But the challenges of 2020 don’t need to define your employees’ financial future. Provide them with additional education and resources, and you can ensure they’re recovered from the crisis and back on financial track sooner rather than later.

Reach out to your Voya relationship manager for information and tools to help your employees get back on track.

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