Editors’ Note: This is Part III of a four-part series about the importance of aligning the retirement benefits an employer offers with those employees’ interests and needs. Part I is here; Part II is here.
Increasing employees’ financial literacy figures into the effort to better align retirement benefits and employees’ needs. 
“It starts with acknowledging that employees’ retirement contributions don’t exist in a silo and seeing their personal finances holistically—from the burden of student loan repayment to building an emergency fund,” argues Harlyn Croland, Head of Business Operations & Strategy, at Betterment at Work.
Educational initiatives (such as workshops, seminars, and online resources) “will have a meaningful impact on their employees’ financial literacy,” says Croland, since it can put them on a path “toward better understanding of investing concepts as well as informed decisions of retirement planning.”
Paul Daneshrad, Founder & CEO of the investment and real estate firm StarPoint Properties, expresses a similar sentiment, asserting that “There needs to be more focus and time spent on financial literacy from employers and administrators.” Further, he says that “Employers should require all employees to take a financial education and planning course. This course should be mandatory and taken every three years.”
Start Young
It is not enough to reach people when they are employees, Daneshrad argues. “It actually should start early, in high school, and be reinforced at all levels as people age,” he says.
“Start very young, high school or earlier,” Daneshrad advocates. “Have it start within the family and be taught and emphasized by the family: parents and grandparents. Reinforced in school by teachers, and a specialist comes in once a year to educate in more depth. Every child should have a retirement account set up by the time they are 18,” he continues.
Money Dysmorphia
Credit Karma reports a trend that supports Daneshrad’s argument. They say that late in 2023, a phenomenon called “money dysmorphia”—a condition in which an individual feels insecure about their financial condition regardless of how things really may stand—became more pronounced.
This, they argue, is having an especially significant impact on younger generations. They cite a study that Qualtrics conducted on their behalf, which found that 41% of millennials and 43% of Gen Z and experience the condition. Further, they found that 48%) of Gen Z and 59% of millennials reported that they feel behind financially.
But gloom is not reserved only for younger generations. In the March 2024 study “Retirement Planning & Health Care Costs,” eHealth and Retirable reports that most of those surveyed don’t think their money will last through retirement. More than 70% of those who have not retired expect that they will outlive their retirement savings. And there is pessimism even among those who already have retired—just over 40% think their savings will be depleted during their retirement.
Not only that, says eHealth and Retireable—while just over half of the people in their study said they are satisfied with their current financial situation, a mere 17% are very satisfied. And SoFi at Work in its most recent report says that 45% of the employees it studied feel stress about having insufficient retirement savings.
Employees Are Receptive
SoFi at Work suggests that employees are receptive to efforts to increase their financial literacy. They report that in a survey they conducted with CITE Research of 750 human resources leaders and 750 full-time employees, the sentiments employees evinced spelled “a tremendous opportunity for employers to offer financial education” to employees.
And the chances that their employees will take advantage of that is increasing, SoFi goes on to say. They report that the interest employees evinced in increasing financial literacy in their latest study was double that of the employees in their previous study—it now stands at 35%, and was 17% before.
T. Rowe Price, too, finds strong support among employees for education. In their “Reference Point” report about participants’ behavior and attitudes concerning retirement plans in 2023, they say that participants’ engagement with educational resources about investing surpassed their engagement with any other topic. They add that participants’ interest in content concerning financial wellness also grew in 2023.
Next: Why aligning retirement benefits and employee needs matters
- Log in to post comments