The U.S. is experiencing one of the lowest unemployment markets in more than 30 years; however, many working Americans still feel financially stressed. In fact, six in 10 cite personal finances as the top source of stress in their life. This is especially true when it comes to their ability to live within their means, save money, and/ or plan for unexpected circumstances. The financial anxiety is not surprising since 40% of working Americans have less than $400 in the bank for emergency expenses.
With a tight labor market, small businesses must come up with new and inexpensive employee benefit strategies to position themselves as the employer of choice. A recent uncovered three major financial concerns impacting working Americans: college debt, ensuring their paycheck was protected from unforeseen circumstances, and financially protecting their families in the case of an untimely death. Small business owners can offer their employees voluntary benefit options such as disability insurance, life insurance and college tuition benefits. In doing so, they will not only help retain employees, but help attract new talent to join their company.
Let’s take a closer look at the three major concerns of employees and how small business owners can help alleviate their anxieties.
Paying Off College Debt – The nation’s student loan debt has soared to more than $1.5 trillion, surpassing automobile loans and credit cards to become the largest source of personal debt aside from mortgages. According to Guardian Life’s 5th Annual Workplace Benefits Study, College Debt in America; The Case for Tuition & Loan Repayment Benefits, seven in 10 workers with college debt say money and personal finances are the primary source of stress in their lives.
Employers are increasingly aware of the financial pressures on their workers due to college debt, and student loan assistance has become one of the top benefits discussed at job and recruiting fairs. However, according to Guardian Life’s study, less than 10% of employers currently offer college savings or debt-related benefits, and in small businesses it is even less. Student loan debt repayment plans and 529 savings plans are more likely to be found in larger companies (i.e. 1,000 or more employees) and professional sectors such as high tech, financial services, education, and healthcare.
One of the barriers to offering college debt benefits is that companies do not receive a tax incentive for contributions. However, there are several pending Congressional bills that could give more favorable tax treatment to tuition assistance programs and student loan repayment plans. One way for small businesses to provide college tuition assistance to their employees is by working with an insurance company that provides college tuition assistance as part of their plans (e.g. Guardian’s College Tuition Benefits (CTB) Program). Guardian offers a rewards-based program through employers that provides a simple and effective way for employees to save for sending a child or loved one to college. Members enrolled in the program earn 2,000 tuition reward points annually, and each tuition reward point equals $1 in tuition reduction.
Income Protection – One of the easiest ways to protect income is through disability insurance, yet fewer than six in 10 American workers owned disability insurance. In Guardian Life’s 6th Annual Workplace Benefits Study, Income Protection; The Role of Disability Insurance in Financial Wellness, they found that nine in 10 adults agree it is important to be financially prepared if a household’s primary wage earner can no longer work due to a serious illness or injury.
According to Gene Lanzoni, assistant vice president, thought leadership, at Guardian Life, “While we see most Americans feel it is important to protect their salary from an unforeseen circumstance that interrupts their ability to work, the fact that many do not have disability insurances indicates there is a lack of awareness about the benefits of this insurance, and a lack of access.”
Most Americans (93%) say they obtain their disability insurance through their employer; yet access to disability insurance varies from employer to employer, with larger organizations (82%) much more likely to offer it compared to smaller firms (49%). Given 53% of Americans are employed by small businesses, many adults simply do not have access to disability insurance at work. In order to better compete with larger firms and help employees feel more financially secure, it is vital for smaller companies to offer their employees disability insurance as an option.
Ensuring your loved ones are protected – Most working Americans want to know that their family will be protected financially in the event of their premature death. Unfortunately, 60% of all households have either no life insurance or less than industry recommended coverage amounts (around five to seven times an individual’s annual salary). Providing life insurance to employees is one more benefit that could mean the difference between hiring a great employee or losing them to another company.
Small businesses are the financial lifeblood for so many people in the U.S. It’s imperative that business owners understand the financial stresses felt by their employees. By offering voluntary benefits (e.g. college tuition savings, student loan debt repayment plans, disability insurance and life insurance), business owners can help improve their employees’ financial wellness and overall satisfaction with their jobs.
For more information about benefits you can provide your employees that can help their financial wellness, click here.
Sponsored by Guardian Life