The Fix: Financial Fitness
How can employers help get their employees on the right track to financial well-being?
Luke Vandermillen, vice president of retirement and investor services at The Principal Financial Group, says the key to promoting employee financial health is designing a retirement program that provides incentives to save.
What level of saving will help employees reach a secure retirement?
Our studies have shown that you need to get employees, between their own contribution and the employer matching contribution, in that 10 to 15 percent range over the course of their career. The best way to do that is to automatically enroll them in the plan at a level that’s meaningful enough so they can reach that target contribution rate.
What is one way employers can encourage employees to save more?
Instead of matching 50 cents on the dollar on the first 4 percent that someone contributes, maybe match 25 cents on the dollar for the first 8 percent that they contribute. The employer is still going to spend the same amount, and it’s going to encourage employees to reach a higher contribution level.
Is there a relationship between financial and physical fitness?
If someone has really taken care of themselves and they’re healthy, when they reach retirement, they’ll have more money to spend on travel and things they enjoy versus spending a disproportionate amount of their money on health issues. Not to mention if employees are healthier, they’re more productive.
The correlation between physical and financial health is probably the biggest trend in benefits that we’ve seen over the last decade.