Does financial wellness education increase retirement plan participation?
Any good advisor knows, a successful retirement plan requires more than a robust investment menu. Plan participation is essential, but also one of the biggest challenges.
Financial wellness education can increase participation, bolstering plan participants’ chances of a successful, on-time retirement. In turn, this helps plan sponsors by reducing costs associated with retirement-age employees.
With American adults experiencing increased financial stress during the pandemic, plan sponsors and participants are especially interested in financial wellness benefits that can help reduce financial stress and prepare them for economic uncertainty.
The costs of delayed retirement
Employees over age 65 face almost double the health care costs of those between the ages of 45 and 54, translating into higher costs for employers offering health care benefits. Employers with an aging workforce are especially vulnerable to these higher costs.
A 2019 Fidelity Investments study found that 73 percent of employers reported increased costs when employees delay retirement; 31 percent said it inhibited strategic planning; and 21 percent reported lowered productivity.
It can cost employers $50,000 per employee per year for a one-year delay in retirement, Prudential found. For employees who delay two or more years, the cost gets even higher.
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