Thinking Outside the 401(K): Three Financial Wellness Benefits to Build Resilience Post-Pandemic

Ah, the 401(k). For years, it's reigned supreme as the gold standard of retirement planning. And for many employers, it's been the primary financial wellness benefit that they offer. As of March 2020, 71% of workers across industries had access to some form of retirement benefit such as a 401(k).

Retirement planning is a huge part of long-term financial wellness — but what happens between now and then? While the 401(k) is a great place to start, it's safe to say your employees probably also have pressing short-term financial priorities.

"I think financial health, to all of us, 12 months ago, was about, 'let's make sure we have good participation in our 401(k) plan,'" Kelley Elliott, Delta's VP of Total Rewards, told us. Then 2020 happened. Things changed.

The pandemic and its economic fallout exposed vulnerabilities across the personal finance landscape. In September 2020, three in five (61%) Americans reported that they didn't expect their emergency savings to last them through the end the year. One in five (20.9%) said they had never had emergency savings to begin with. While that 401(k) account may hold a lot of value in the long run, many were far more focused on what the next few months had in store.

Financial wellness benefits have evolved to address many of the short- and long-term financial concerns your employees may face. (Plus, these benefits pack a big punch of positive impact for employers and their employees, ranging from morale, to productivity, to an ROI of up to 1500%.)

Out of the hundreds of new financial wellness offerings, we've simplified the landscape to the three most important (and impactful) post-pandemic categories: financial education, health savings, and student loan management.

Financial education and coaching

Why It Matters

Many employers offer financial wellness benefits without providing guidance on know how to use them. And that approach may not work for everyone.

Here's the thing — personal finance is hard. And unfortunately, most schools don't prepare their students for this core element of life. For the vast majority, this is something they have to learn on their own.

So financial literacy varies from person to person. Some people have a good handle on budgeting or investing. Others believe that they can't afford to save, or don't know where to start.

"I think it's hard to help people become financially healthy when it feels like you're speaking a different language," Kelley told us. So the best thing for you to do is to give them a translator. Or a dictionary. You get what we're saying: Help them learn to "speak" personal finance.

What It Is

An effective financial wellness plan meets people where they are, offers an educational component if they need it, and accounts for all backgrounds and levels of financial literacy. We'd recommend taking a two-pronged approach, combining communication and benefits.

The good news: There's no shortage of great (and free!) financial education resources out there — you just have to know where to look. So help your employees find them. Try featuring financial wellness in an employee newsletter. Or invite a personal finance expert in to host a lunch-and-learn. Or simply provide some links to helpful websites. We'd also recommend talking to your existing benefits partners; they may be able to help you out.

Still, remember that not everyone is starting from the same place. Some may want one-on-one support. That's where those benefits come in. Many vendors offer personalized services like coaching or financial planning, to answer questions and create bespoke plans for each user's unique situation. Check out Northstar, Origin, and Brightside, all of which provide financial advising benefits with a side of education.

Health Savings Accounts (HSA)

Why It Matters

Breaking news: Healthcare in the US is expensive. Like ridiculously expensive. Like "a third of working Americans hold outstanding medical debt" expensive.

There's never been an ideal time to take a hard look at the crisis that is America's healthcare costs — but last year gave us no choice. In the face of a global pandemic, millions were forced to ask themselves a difficult question: if the unthinkable were to happen to me or my family, would we be covered? Or would we be left drowning in medical bills?

What It Is

A Health Savings Account (HSA) is an account used to pay for medical expenses like doctors' appointments, prescriptions, or even over-the-counter medications. Although they won't prevent high medical costs, HSAs help provide extra cushion against any unforeseen charges that may arise. Think of it as a checking account for your employees' healthcare.

And how does a triple tax advantage sound? Not only are employer-provided HSA plans pre-tax, but account holders don't pay taxes on the account's growth or any withdrawals.

If you really want to take the extra step towards financial wellness, your employer can opt to make contributions to its employees' accounts. That support is becoming more common; in January 2021, 34% of HSAs received an employer contribution, with an average contribution of $502.

It's important to note, though, that HSAs are only available to those who are enrolled in a High-Deductible Health Plan (HDHP).

Student loan management or repayment

Why It Matters

Since 2010, the U.S. student debt burden has increased by over 100%, bringing the total to over $1.7 trillion — and it's only getting worse. More than 6 in 10 (62%) students of the class of 2019 graduated with student loan debt, owing an average of $28,950.

And later this year, we're anticipating challenging times for student loan borrowers. Last March the CARES Act introduced legislation that temporarily paused federally held student loan payments and set interest rates at 0% — but that pause will end eventually. Come August 31, 2022, all loan payments will resume as normal.

Not everyone is prepared for this. Plus, millions of borrowers who hold private loans were on their own this last year, with no legislative relief to ease the pressure.

What It Is

Thankfully, there are two main student loan benefits employers can offer to help lighten borrowers' burdens as payments resume and onwards:

Employer-sponsored student loan assistance is a relatively new benefit. Included in the CARES Act was a provision that made it legal for employers to help their employees pay down their student loans through tax-free contributions. Employers can now contribute up to $5250 annually — but even just an extra $50 per month can drastically shorten the loan repayment timeline.

Student loan management platforms take a two-birds-one-stone approach: they educate users on the ins and outs of student loans, while recommending the best repayment strategy for their unique situation and financial goals. Summer and SoFi both provide this service as an employee benefit.

Moving Forward

After the last year, the benefits of thoughtful, strategic financial planning are evident. But for many, achieving stability without support is an insurmountable task.

By offering your employees the tools and education to manage their finances, you're giving them the opportunity to build resilience in the face of uncertainty — and that in itself is invaluable.

Looking for more info on different categories of financial wellness benefits? Check out Benlightenment, Nava's no-nonsense, no-jargon, no-sweat guide to benefits.

Unsure which financial wellness vendor is best for your employer’s needs? We got you. Let Nava's benefits experts do the heavy lifting. Contact us here for a personalized vendor recommendation.