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Concerns about high inflation and a possible recession have not only impacted the financial lives of many American workers — they’re also now changing the type of workplace perks that employees say they’d value most.
Some employers are taking notice and expanding their offerings.
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Employees report that both building savings for an emergency and paying monthly bills are just as stressful now — if not more so — than saving enough for retirement, according to the 2023 Workplace Wellness Survey by the Employee Benefit Research Institute.
This is the first time in four years of the EBRI survey that saving for retirement is not the primary financial stress factor for employees.
Traditional retirement plans aren’t enough
For years, employers’ financial benefits mostly focused on offering robust workplace retirement plans.
Yet, when asked where they would put an extra $600 provided by an employer, workers in the EBRI survey said they would spread it out — putting $192 toward funding retirement, $171 to emergency savings and $89 toward a health savings account, followed by paid time off, college savings and paying down college debt.
Workplace emergency savings plans are popular
About 42% of employees want to be automatically enrolled in an emergency savings account through their employer, according to research from the Bipartisan Policy Center, although human resources consulting firm Buck, for its part, has found that just 10% or employers offered these benefits in 2022.
Yet those numbers may increase as employers recognize the upsides for the worker and the workplace.
“When you do need that money for an emergency, you’re not taking a withdrawal from your 401(k) plan, you’re not missing a student loan payment, you’re not getting evicted, you’re not having your water shut off, so that you can actually come to work without having to worry about all of that,” said Chantel Sheaks, vice president of retirement policy at the U.S. Chamber of Commerce.
New law gives employers more benefits flexibility
The passage of Secure 2.0 legislation last year also gives employers more flexibility to offer emergency savings accounts.
Starting next year, as much as 3% of an employee’s paycheck can be automatically placed in an emergency savings account, up to a total of $2,500. Employees can then withdraw the money up to four times a year with no fees.
The law, which goes into effect in 2024, also includes provisions for providing matching 401(k) contributions based on employees’ student loan payments.
“Employers used to be all about just talking about the wage, and I would say they spend about equal time now talking about those other things that are keeping their employees from being productive,” said Amy Friedrich, president of benefits and protection with Principal Financial Group. Principal Financial Group works with more than 145,000 small and midsized businesses across retirement and employee benefits.
Many employers are also now meeting worker requests for financial planning resources, from credit card and other debt counseling to financial coaching, to help them establish a budget and financial plan.
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