The fitful economic recovery and growing pessimism over the long-term stability of Social Security are bringing increased attention to the importance of financial literacy and employment-based education benefits.
For example, a recent USA TODAY/Gallup Poll found that a majority of retirees expect their current benefits to be cut, and a record 60% of non-retirees predict Social Security won't be able to pay them benefits when they stop working.
Skepticism is highest among the youngest workers: Three-fourths of those 18 to 34 don't expect to get a Social Security check when they retire, according to USA Today.
Confidence in Social Security has significantly eroded since 2005. The percentage of retirees who predict cuts has jumped by 24 points, even though benefit levels have never been cut for current retirees. In that time, the number of non-retirees who doubt they'll get benefits has risen by 10 points.
Although it is widely acknowledged that Social Security does not provide sufficient retirement income, Americans still do not save enough for a well-financed retirement.
Not only are individuals and households inadequately prepared for retirement, according to analysts, but too many people incur large amounts of debt. The current estimate is that 30% of Americans are in financial distress.
Numerous research studies show that those individuals who have a higher level of financial knowledge as a result of financial education tend to make better financial decisions. If people are financially educated, the theory goes, they usually are able to increase their financial well-being, prepare better for retirement, and even improve their health.
The result is a less distracted and more productive workforce. For employers, this means reduced health care cost, fewer wage garnishments, less absenteeism, less presenteeism, and lower turnover.
What role, if any, does an employer have in educating workers to understand how to manage their finances?
Five years ago, just 2% of employers offered financial education workshops to employees, according to a Hewitt Associates survey of companies on the availability of “financial security” programs. In 2010 that figure jumped to 19%.
To help examine the progress of work-based financial education, Employee Benefit News is teaming on a research initiative with the Personal Finance Employee Education Foundation.
We invite plan sponsors to help us assess employer interest in the topic of financial education by participating in an online survey available here http://www.zoomerang.com/Survey/WEB22AXSYN8FP8.
Results will be shared in a future issue of inBrief and will also help inform programming at EBN’s annual conference, Benefits Forum & Expo.
