Why is your 401k plan broken?

January 16th, 2020

Times are changing. Our grandparents/parents generation had a pension. Today, employers move towards a 401(k) match as a company’s main retention tool.

Most companies have transitioned away from pension plans years ago, yet it has taken quite a bit of time to realize that investing in retirement and long term savings matter to attracting and retaining talent.

Ninety percent of employers offer a traditional 401(k) plan and 76% of these employers provide an employer match (SHRM’s 2017 Employee Benefit report). However, innovation in benefits to meet the financial reality of workers lags behind.

Student Debt Affects Retirement &... well everything! Today, more and more of our workforce is graduating with staggering student loan debt. According to CRR’s June, 2018 study, those with student loan debt save at 50% the rate of those without student loan debt. The reality is that student loan debt affects a person’s financial capability to contribute to retirement and adds to their overall level of financial stress.

Financial health directly impacts productivity, work performance, and even employer healthcare costs. The healthcare costs resulting from stress are enormous. It is estimated that between 75 and 90 percent of all physician office visits are for stress-related ailments and complaints (APA). Student debt affects workers beyond their house and personal time, the impact affects their work performance and satisfaction as well.

Employer funded financial wellness reduces overall company cost, from healthcare to losses in productivity, turnover and more. The small change of letting employees choose how you best address their financial concerns changes this conversation. Let’s personalize benefits, like everything else today is personalized.

Over 70% of today’s college graduates have student loan debt.

Employers can now give their workforce a choice on how to spend the company match. LoanSense assists employers to set up their retirement match to match student loans 1-to-1 or a split the match between retirement and student loans. Providing flexibility builds a student loan program out of the retirement benefit you are already funding today and those with debt stay for twice as long when you directly address their largest financial stressor. This is all done without any changes to a company’s 401k plan documents.

Let us perform an analysis on your company’s return on investment by rethinking your retirement program to fit today’s workforce needs.