Budgeting tools and access to a financial advisor are nice — but it's 401(k) benefits that employees really care about.
Access to a high-quality 401(k) or other retirement plan and a 401(k) matching program are the most important financial wellness benefits to employees, according to a recent survey from Betterment for Business, Betterment's 401(k) business.
If workers aren't getting those from their employer, many are willing to change jobs. Of the employees surveyed, 74% would be likely to leave their job for another company that offered better financial benefits, and the top two most enticing benefits are — again — a high-quality 401(k) or other retirement plan and a 401(k) matching program.
The survey found 65% of employees would be tempted to leave their job for another that offers a high-quality 401(k) or other retirement plan, and 56% said the same for a 401(k) matching program.
The survey results include responses from 1,000 full-time employees who answered the questions online in September. A financial wellness benefit helps employees manage their finances in some way, and is in a separate category from core workplace benefits like health insurance and paid time off.
This survey shows how important financial wellness benefits have become to workers over the course of the pandemic, and that people are looking towards their employers for guidance and support, says Kristen Carlisle, general manager of Betterment's 401(k) business, via email.
"Companies should take note and recognize that 401(k) is no longer just a 'nice to have' — it’s a critical benefit that employees expect to have access to," Carlisle adds.
Traditional 401(k)s are employer-sponsored, tax-deferred retirement plans. That means employees contribute pre-tax dollars directly from their paychecks to be invested — generally in mutual funds or, in some cases, exchange-traded funds (ETFs) and individual stocks.
Employers will often match an employee's contribution — so say you contribute 3% of your paycheck to your 401(k), your employer may contribute 3% as well. While the money in the plan grows and is reinvested tax-free, the employee pays income taxes on the money they withdraw from their 401(k) in retirement. There are also Roth 401(k)s, which work differently: The employee contributes post-tax money, and the funds are tax-free when withdrawn.
The pandemic upended finances for many, forcing them to reassess their financial situations. Of the employees surveyed, 68% say they now prioritize building up their retirement funds more than they did pre-pandemic, and 49% say they no longer think their 401(k) will be enough to sustain their retirement.
Of course, an employee's specific situation also helps determine whether or not they even can worry about something as far down the line as retirement. The survey found that 55% of student loan borrowers indicated that having access to a high-quality 401(k) would motivate them to stay with their employer, compared with 72% of those without loans. Retirement planning is clearly important to both groups, but people without student debt are prioritizing it more, according to the report.
Still, retirement saving is clearly a high priority for most employees, and employers appear to be listening. Of those surveyed, 34% said their employer has begun offering new financial wellness benefits over the past year — the most common being a 401(k), wellness stipend and 401(k) matching program.