BY DENNIS HEALY
CONGRATS! We made it through 2021 — and what a year it was (insert deep breath here)! But as we dive into 2022, employees are not out of the woods yet. Many still face challenges – chief among them, ongoing financial hardship. Prices have increased at record rates for everything from groceries and housing to energy costs and vital healthcare services.
The bottom line is throughout the events of the past year, a substantial share of households across the U.S. have not been adequately protected from financial problems. Let’s take a closer look at some of the causes of these money woes — and how you can provide employers with competitive, cost-effective voluntary benefits programs that help their employees better navigate these matters heading into the new year.
Employees and employers alike dealt a triple whammy
As a nation, we can’t seem to catch a break on getting ahead. First, just when it seemed that companies could return to work in some fashion, the COVID-19 Delta variant swept in to disrupt those plans. Then, the alarming “Great Resignation” phenomenon, where a reported 4.4 million employees left their jobs last September, dramatically altered workplace demographics. To top things off, an inflation-induced financial hangover is expected to linger into the second half of this year, weighing on employees’ minds as they struggle to pay the bills while remaining focused on their jobs.
The impact of inflation
To learn more about the impact of inflation on employees’ lives and finances, I touched base with Cynthia Campbell, Chief Experience Officer at BALANCE. BALANCE is an ARAG® partner and organization based in Concord, California, that provides comprehensive financial counseling and education services.
While the economy has struggled to re-emerge from the shadows of the pandemic, Campbell notes that many Americans are using their credit limit as their safety net. “As those limits reached their maximum, the payments were growing larger and becoming harder to pay because of reduced household incomes.” She adds, “For those who have found employment again, they are able to pay the current month’s bills; however, because they were off work and/or sick, they fell behind on some things. Trying to find the ‘extra’ to make up on the past due amounts is challenging.”
Campbell’s advice for clients facing these types of financial challenges? She outlines three key areas of focus to help improve your financial wellness, especially in times of inflation:
The bottom line is throughout the events of the past year,
a substantial share of households across the U.S. have not been adequately protected from financial problems.
Start by building up your savings
While most Americans (75%) did report they saved either the same amount or more in 2021 than they did in 2020, today’s workers safety net is still being stretched thin. For example, only 39% of Americans have reported being able to afford a $1,000 emergency expense. During an inflated market, try to “pause” consumption. For example, if you can wait to update the living room furniture until next year, maybe you will not need to pay the 11.2% inflated price on furniture this year.
- Work to improve your credit score. Did it take a hit during the pandemic? Did the balances creep up? Did you get in the habit of only paying the minimum? As you are getting back on your feet, be sure to pay more than the minimum balance – on time – and avoid taking on any additional debt.
- Scrutinize your household budget — as it is right now, not as it was before the pandemic, nor how you hope it will be in the future. That’s another great step to getting back on track.
The struggle is real: retaining and recruiting employees
Meanwhile, medical concerns, rising unemployment and economic uncertainty have culminated into an almost two-year roller coaster ride for employers, with retention ups and downs, swings in recruitment and remote-working stops and starts. According to a recent Willis Towers Watson survey, roughly 73% of employers have reported difficulty attracting workers, and over 60% expected their retention problems to extend into 2022.
Offer voluntary benefits and financial solutions that deliver real value
More and more employers are recognizing the need for employees to take control of their personal finances and the impact on their overall well-being. As a broker, you have a “just-in-time” opportunity to help your clients bolster their voluntary benefits program by offering employees more pathways for increased financial wellness. You can start with these steps
- Discover What’s Hidden in Your Current Benefit Offerings
Part of your solution to help employees improve their financial wellness may be right in front of you. The Consumer Financial Protection Bureau suggests reviewing your clients’ existing human resources programs and employee benefit resources that can be leveraged as part of your financial wellness program. For example, your organization’s financial, banking or life insurance partners may have tools, programs or websites designed for your employees that you may not be fully promoting.
- But Also, Think Outside the Box
Consider what benefits could supplement your existing programs — and help employees get a leg up on the financial wellness ladder. This could include offering benefits like a student loan repayment plan that can help employees eventually break free from college loan debt and focus more on savings goals. An unfortunate reality is that nearly 15 million millennials carry student debt, more than any other generation, meaning employer-sponsored loan assistance is greatly appreciated.
For employees dealing with significant debt or financial issues, a legal insurance plan could also be a valuable asset, providing affordable access to legal counsel that helps them understand their options as well as the short- and long-term implications of their financial decisions. Legal insurance members can also contact a financial counselor for one-on-
one advice and take advantage of online financial educational tools and webinars.
- Find Flexible Solutions and Hidden Gems that Support Caregivers
It’s no secret that playing the dual role of employee and caregiver can be taxing physically, mentally and financially.
In fact, 62% of working `caregivers sometimes feel overwhelmed by financial stress. And nearly three quarters (72%) of them say they wish their employer offered more flexibility to support caregivers.
This is an opportunity to sit down with your clients for a benefit review to uncover any gaps in their program that may not be adequately addressing caregivers’ needs. Again, look for features and services within a current benefit employers may not be fully promoting to their team. This could include a telehealth option in their medical coverage, financial education opportunities through a retirement plan or a caregiving referral service offered through a legal insurance plan.
By examining these new (and existing) avenues of voluntary benefits, you’ll increase the overall value of your clients’ offerings, which in turn will compel existing employees to seek out more help – and increase their overall satisfaction with their employer. It could also attract potential employees because these essential offerings can help distinguish your clients from competing employers.
DENNIS HEALY is a member of the ARAG® executive team. Dennis is a passionate advocate for legal insurance because he has seen firsthand how it helps people receive the protection and legal help they need. He has nearly 30 years of insurance industry experience, with a primary focus on the sale of group voluntary benefit products to employer groups of all sizes through the brokers and consultant community.