There are some things that a monthly paycheck just can’t cover. After the bills, taxes, groceries, and mortgage is paid off, the average American employee hardly has anything left to secure his/her own financial future, or pay off mounting debts.
For the working public, the need for financial security is very real. To illustrate why, consider these facts:
- 6 out of 10 Americans don’t have $500 in savings – Source
- Payday loans charge an average 391 percentage rate – Source
- Student loan is now the second highest debt category at $1.3 trillion – Source
- 78% of fulltime workers say they live paycheck to paycheck – Source
As a business owner, you are in a better position to help the people who work for you – more than anyone else. The financial costs required come with its own rewards. Companies can increase job satisfaction and retention by offering financial benefits that help their employees secure themselves financially.
If you own a business, here is how you can improve employee financial benefits within your company.
Offer a Retirement Plan
Studies show that median savings for the average working-age families in the United States is just $5,000. As a result, most families, even those approaching retirement, have little to no retirement savings. The Employee Financial Wellness survey, by PWC, revealed that 37% of employees cited their top financial concern as not being able to retire when they wanted to.
This isn’t surprising. After expenses like mortgage payments and college tuitions are paid, you hardly have any savings left to pay for the expenses you need to cover after retirement.
If you want your employees to worry less about their future and more about work, give them the financial incentives to do so. For example, you can start with the following:
- Offer a 401K Retirement Plan: Pension plans are starting to become rare, and employees are seeing the benefit of a company that offers a 401 (k) plan. It’s a cost effective way for employers to offer tax deferred contributions to investment funds and a way to retain top talent.
- Offer a Roth IRA: Unlike a 401K, a Roth IRA is set up directly between an individual and an investment firm. It’s a good choice for employees who believe that they will be in a higher income tax bracket when they retire.
Offer to Pay for Medical Expenses
In the same survey by PWC, 55% of employees cited their top financial concerns as not having emergency savings for unexpected expenses. Medical emergencies are one of these expenses.
To improve financial benefits, ensure that employees don’t have to pay out-of-pocket for incidents that are beyond their control.
- Worker’s Compensation: Worker’s compensation insurance gives injured workers the right to claim financial benefits for injuries acquired on the job. As an employer, the insurance also precludes your workers from suing you for the injuries covered.
- Coinsurance Plans: This is when employees cover a portion of their medical bills. It’s usually at a 70/30 or 80/20 ratio, with the insurance company paying the bulk of the bill.
- Healthcare Reimbursement: Employees choose the plan they like, pay for it themselves, and are later reimbursed for the out-of-pocket medical expenses specified by you.
Offer to Pay Off Debt
Everything from college tuitions to mortgage payments can rack up debt. So, it’s not surprising that we have studies showing people earning six figure incomes and still struggling to make ends meet.
- Student Loan Repayment Package: A 2015 survey, conducted by American Student Assistance, revealed that around 76% of respondents felt that a ‘student loan repayment financial package’ would be a deciding factor in accepting a job. However, only 4% of employers currently offer the financial benefit. Strive to be that four percent to attract top talent and encourage employee retention.
- Forgivable Loan Package: This is a fairly new addition to financial benefits offered by employers; but it can be invaluable for employees. A recent example is startup benefits provider, Benevate, which offers employers a platform to provide employees forgivable loans for paying off student loans, and even down payments for houses.
Your employees are your biggest assets, and the best way to retain any asset is to secure it. Financial benefits like the ones mentioned in this post are a good way to offer employees the financial security they need to keep them secure in the future.
Steven McMeechan is a strategic marketing and communications specialist with over twenty years’ experience in senior marketing management roles across a range of industries including Information Technology and Financial Services. He works for Capstone Financial Planning and lives in Melbourne Australia.