Moving Forward on Financial Wellness – ThinkAdvisor

What You Need to Know

  • The pandemic has hit some American workers hard.
  • It’s helped give other workers more flexibility, by reducing their spending.
  • One possible solution: Employers could offer more holistic, personalized financial wellness programs.

As professionals in the financial services industry, many of us have devoted our careers to helping individuals attain financial peace of mind and retirement security — and the benefits that go along with it. The pandemic, though, has cast this work in a new light, invigorating individual Americans’ interest in financial preparedness and highlighting the connection between holistic financial wellness and overall physical and emotional wellbeing.

This is an important moment in time and opportunity for our industry and the Americans we serve, as we help to guide those who have just experienced, first-hand, the complex and unexpected path life can take. As we engage in this new environment, it’s important to understand individuals’ unique and varying needs and challenges, and to consider the ways legislation and employer relationships can positively impact and further our work.

The Current Environment

The pandemic reset the financial priorities of American workers in profound ways, contributing to the emergence of two distinct post-pandemic scenarios.

In the first, we’ve seen an increase in financial stability. These individuals, who may have had retirement preparation plans in place for some time, likely didn’t experience job loss and saw a shift in discretionary spending as a result of traveling or eating out less. About 4 in 10 Americans say they have been spending less money than usual since the pandemic began, according to a March report from the Pew Research Center.

The second scenario involves those who may have experienced job instability or been hit hard by the cost of medical or other expenses. They are feeling less financially stable.

According to the Employee Benefit Research Institute 2021 Retirement Confidence Survey, 6 in 10 workers who experienced income or job loss say the pandemic has had a negative impact on their ability to save for retirement, compared with just 1 in 8 among those who did not; 17% have pushed back their planned retirement date as a result of the pandemic and its economic impact.

Addressing Individuals’ Challenges

The widely varying experiences of these two populations confirms what we’ve always known to be true: that no individual experiences life in the same way, regardless of situation or demographic.

As recordkeepers and financial professionals, we must recognize that the path to financial wellness, as well as the end goal, will be different depending on the individual. Still, meeting each individual where they are, and providing the tools and resources they need to get to the next step — whether that’s creating a budget, exploring insurance or long-term care protection products, or implementing a decumulation strategy — will be essential in helping American workers continue to feel more confident.

Our approach must also go beyond the bank account and retirement plan and consider the critical role physical and emotional wellness play in overall financial wellness. These concepts are intrinsically tied and neglecting one in favor of the other impedes holistic wellness.

Employers’ Stake in Holistic Wellness

Some of us started as children feeding pennies into the piggy bank, then had a long gap in meaningful financial knowledge action until adulthood. For many, the workplace is the frontline for financial education, and it may even be one of the only places where adults receive financial guidance.