How to Help Generation X With Financial Wellness and Retirement Investment
Generation X is the most financially stressed generation, but there are ways to help.
Generation X employees are now 36-56 years old, meaning many are, or will soon enter, prime earning mode. But according to the ADP white paper, "Generation X: The Most Financially Stretched And Financially Stressed Generation," despite putting money into their retirement investment account, they were the most financially stressed of all the generational groups in 2017.
Know the Range of Financial Stressors
Because of their age range, Generation Xers are faced with myriad financial responsibilities, including dependent children who are often college age and parents whose health may be failing or whose own savings may be dwindling. In addition, many have student loans that are nearly as persistent as mortgages, but without the appreciation in value of the underlying asset. This leads to a unique, expansive set of financial stressors.
According to the ADP white paper, Generation Xers' biggest concern is the lack of a sizable enough emergency fund. Approximately 61 percent have less than the recommended six months of emergency savings set aside, with 24 percent having no savings for the unexpected. Because of the negative impact of this stress on work performance, it's critical for financial leaders to find ways to support and encourage Generation X employees to improve their financial situation and lower their stress.
Implement Multi-Faceted Financial Wellness Programs
Offering financial wellness programs is one way to have an immediate impact. According to Forbes, such programs have recently become very popular because more people are becoming responsible for greater and greater segments of their financial profile. For example, more people are responsible for larger portions of their health care premiums and overall health care bill. In addition, more employees than ever before will be relying solely on a combination of defined contribution plans (401(k)s and 403(b)s) and social security to fund retirement.
"Lunch and learn" programs, seminars and online debt management and budgeting tools are just a few of the financial management program options organizations can offer. Online and offline training, and support that helps employees manage their mortgages, protect income or save for emergencies can be instrumental in helping employees become better financial managers.
The best financial wellness programs are comprehensive, addressing multiple areas of employees' financial lives. Employees view these programs as important. According to the ADP report cited earlier, 68% of Generation X employees actually use the financial services their organizations provide.
Increase Participation in Defined Contribution Plans
The good news is that three-fourths of this generational group are putting money into retirement investment and savings, according to ADP. To grow this further and, ultimately, increase the size of employees' retirement investment, financial leaders can switch from having employees opt in to defined contribution plans to having them opt out. This is called "automatic enrollment." The beauty of this option is that employees must contact the plan provider to disenroll instead of enroll. Often, employees don't experience an impact from the money being taken out. When done automatically, what was not there to spend initially is typically not missed.
According to the Chicago Tribune, automatic enrollment has proven to be highly effective in increasing the overall employee participation and savings rate. Organizations operating under auto enroll (opt-out) have 90 percent participation rates in their 401(k) plans, while those with manual enrollment (opt-in) arrangements have an average participation rate of 63 percent.
Another option financial leaders can implement is increasing the company match, either overall or tiered, to encourage higher contribution percentages.
When employees feel appreciated, they are generally more loyal. When employees can relieve financial stress, they have lower rates of absenteeism and are better able to focus at work, increasing their productivity and creativity. In addition, according to ADP, 71 percent of Generation X workers find employers who care about their financial well-being to be more attractive.
Hence, in a tight job market, offering these kinds of incentives can aid in personnel recruitment and retention.
