By prioritizing financial education and skill-building, organizations can help their employees strengthen their overall financial capabilities, which in turn supports their workforce’s long-term well-being and fosters a more engaged, confident and productive team.

In fact, when we look at the motivators of what drives individuals to “get serious” about their finances, the importance of the workplace becomes that much clearer. A recent Corebridge Financial survey found that retirement aspirations and earning a paycheck are the top two factors that drive people to sharpen their focus on finances. Knowing that these two motivators are deeply engrained within the workplace, employers can help employees establish financial readiness early in their careers and continue to provide the building blocks leading up to and through retirement.

A great first step is simply helping employees bring their finances into focus. As we all know, the competition for attention is intense. The Corebridge survey found 65% of adults spend two hours or less on financial planning each month—and 44% spend less than an hour. In contrast, 46% spend at least five hours per month playing games on their phones or computers.

This stark contrast highlights a critical opportunity for employers to help employees shift or create new priorities. One way to grab attention is through targeted and purposeful communications emphasizing financial wellness and engaging employees in their workplace financial benefits.

With their employees’ attention, employers can play a pivotal role in helping staff build financial literacy—a cornerstone of financial readiness.

The Corebridge survey revealed that employees have confidence with simpler financial tasks such as managing day-to-day expenses (52%) and creating a budget (44%), but there are significant gaps in more complex areas.

• Only 29% rate their retirement planning knowledge as advanced or expert.
• 52% rated themselves a novice when it comes to investing in stocks and mutual funds.
• Nearly half (49%) said they’re a novice in understanding compound interest.

Recognizing that employees have different levels of financial knowledge and are at different points in their career, financial literacy efforts should help employees make informed decisions across a broad spectrum of topics—ranging from basic money management and retirement planning to taxes and long-term care. Employers can step in with the right resources at the right time and ideally would tailor their support with courses, seminars and digital tools designed for different audiences.

With employees now thinking more about their finances and building stronger levels of knowledge and confidence, helping them take action is the next step, and one I believe is the most important.

Consider this: When asked what holds them back from being financially capable, respondents to the Corebridge survey cited insufficient funds, debt and poor money management habits as the most significant challenges. Yet, when asked what steps they would take to improve their financial situation:

• Only 16% said they’d create a budget;
• Just 5% would order food delivery less frequently; and
• Only 3% would scale back on streaming services.

Employers can help bridge gaps like these by offering tools that facilitate action, such as financial assessments, budgeting worksheets and debt payoff calculators. These types of resources can transform concepts into concrete next steps and help put employees on the path to saving—ideally early in their career.

The good news is that younger generations are beginning to take financial and retirement planning more seriously, and earlier in life. According to the Corebridge survey, 78% of Gen Z adults said they’ve already gotten serious about their financial future. Conversely, the plurality of Baby Boomers (41%) and Gen Xers (30%) say they didn’t get serious about their financial planning until after the age of 40, with an additional 13% and 19% respectively saying they still have not gotten serious.

These differences are staggering… and encouraging. Taking action earlier can boost employees’ earning power by putting time on their side. Hypothetically, if you were to invest $100 per month for 40 years beginning at age 20 at a 6.5% rate of return, it could grow to approximately $218,000 by age 60. Waiting just three years before beginning to make that same investment could reduce this amount to roughly $177,000.

While beginning to save for retirement earlier is better, it’s never a bad time to begin or increase savings. By implementing retirement plan features such as auto-enrollment and auto-escalation (where allowed), employers can encourage this important behavior to help employees get on track or stay on track.

In support of their employees on a path to financial readiness, organizations may be able to look to their retirement plan provider for help implementing a robust financial literacy and wellness program, including educational and planning resources.

Some providers also offer employees access to financial professionals for enhanced support. Financial professionals can help employees assess their situation, set goals and develop personalized strategies.

By helping employees build their financial knowledge and capabilities through the convenience and comfort of the workplace, employers can help team members face the future with more confidence, knowing they don’t have to go it alone.

SEE ALSO:

• Corebridge Partners with Venerable on Variable Annuity Transaction
• New Digital Experience for Corebridge Retirement Plan Participants

Terri Fiedler

Terri Fiedler is President of Retirement Services for Houston, Texas-based Corebridge Financial, where she focuses on helping Americans achieve a secure retirement. Retirement Services is a leading retirement plan provider for K-12 schools, healthcare, government, higher education and other not-for-profit institutions. Corebridge Financial, Inc. and its subsidiaries provide a wide range of life insurance, retirement solutions, and other financial services.