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Report: Wellness Boost Boosts Retirement Savings

An analysis of retirement plan contribution rates found that employees that improve their financial wellness score from 4 to 6 could potentially improve their retirement plan balance by more than 27%.

According to Financial Finesse’s 2016 ROI Special Report, employees who suffer from overwhelming financial stress or struggle to maintain financial stability tend to incur both immediate and future financial costs for their employers in the form of absenteeism, garnishments, payroll taxes and delayed retirement. However, as employee financial health improves, these costs diminish.

On the other hand, the report says that higher rates of flexible spending and health savings account contributions also occur among participants with higher wellness scores.

The report was drawn from a case study of a Fortune 100 company’s workplace financial wellness program from 2009 to 2014. As part of the study, Financial Finesse separated participants into one of five levels of financial health based on their financial wellness score: suffering, struggling, stabilizing, sustaining and secure.

While those in the “suffering” category amounted to just 13% of respondents, according to the report, their financial stresses and difficulties can disproportionately affect overall workplace health and efficiency. For example, they averaged 17 hours of absenteeism a year; 10.7% had wage garnishments; and 49% reported having taken a retirement plan loan or hardship distribution.

They were also the least likely to contribute to their retirement plan (80%), had the lowest average retirement plan deferral rate (5.04% — not enough to capture the full 6% company match), and contribute the least, on average, to flexible spending and health savings accounts. As for their demographic characteristics, those in the “suffering” category were generally:


  • younger (66% are under age 45);

  • from lower-income households (57% make less than $60,000 per year); and

  • with minor children (62%).


The report’s authors explain that employers can help facilitate a shift in the overall workforce financial wellness score from 4 to 5 by offering financial education in three areas: personal financial basics, retirement planning and investment planning.

The most common steps taken by employees that improved their financial wellness score from 4 to 5 were:


  • Establishing an emergency fund (+50%)

  • Calculating the need for and/or purchasing life insurance (+39%)

  • Paying off credit card balances in full (+38%)


Other notable improvements include a 56% increase in the percentage that understand the tax implications of investment and retirement accounts, and a 55% increase in the percentage that feel confident in their investment allocation.

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