TIAA TMRW. Big ideas. Better retirements.
A modern take on financial wellness.
Time to Read: 7 minutes
Key takeaways
- Money worries can leave us anxious, agitated and often so distracted we can’t focus on other things, including work.
- Employers see how money problems take a toll on employees’ mental well-being, not to mention productivity. But finding solutions that meet a variety of needs and concerns isn’t simple.
- Rather than looking for a static solution, employers can use their own data and ask some key questions to package a program that grows with the individual needs of their diverse workforce.
Money affects mental health, even at work. Employers can help.
Back in simpler times, employers paid employees, and that was that. Whatever employees chose to do with their money was of little or no concern to the folks writing the checks.
In hindsight, perhaps there should have been considerably more concern. Employees who struggle with managing their debt, saving and spending—who lack financial wellness, in other words—tend to be less productive and less loyal, according to
Impact of financial literacy on productivity
Workers coping with financial stress demonstrate 34% higher rates of absenteeism and tardiness according to the Institute’s research on the connection between financial and mental well-being. Stressed-out employees also miss about twice as many days of work compared to their more sanguine counterparts.1
Another recent TIAA Institute study found that employees with
“Financial wellness matters because it’s affecting the work of your employees.”
– Annamaria Lusardi, Stanford University
These are all reasons why Annamaria Lusardi, who coauthored the Institute’s most-recent financial literacy research, believes more employers should offer financial wellness programs as a benefit.
These programs educate and assist employees in managing their finances by offering debt management services, budgeting workshops, retirement planning, savings strategies and other resources. And they try to take the stigma out of the mental health challenges connected to financial stress. About half of all employers now offer such programs, up from 25% in 2015.
“Why should financial wellness matter to employers?” asks Lusardi, senior fellow at Stanford University’s Institute for Economic Policy Research and director of Stanford’s Initiative for Financial Decision-Making. “Financial wellness matters because it’s affecting the work of your employees.”
Where to start a financial wellness program
Employers don’t typically construct their own financial wellness program from scratch, says Chianoo Adrian, product leader for TIAA’s financial wellness offering, but programs can and should be customized to a particular employee base.
The process starts with assessing employee demographics such as age, location and compensation. An institution with a disproportionate number of older workers might be less oriented to, say, student loan repayment programs and more focused on elder care programs. Employers need to ask good questions about what their workers need and the best way to provide them information. From there, employers can zero in on the priorities for program design.
Employers often turn to benefits consultants and financial partners like TIAA for help tailoring pre-built services and educational programs that meet the needs of their employees.
“If someone is struggling with debt, they often can’t afford to save for retirement,” Adrian says. “It’s an equity issue: Are we here to only serve those who can afford to save for retirement? No. We want to deliver on our mission to those who haven't been participating in the plan as well.”
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Packaging a financial wellness solution
Most financial wellness services are free to employees, though some programs, including TIAA’s, can include premium services available for a fee. Programs tend to focus on the following big financial wellness drivers.
Daily finances and debt
People are more likely to rack up debt—be it overspending on a credit card or financing a car they can’t afford—when they don’t have a good handle on
Student loan debt is the biggest financial constraint for many, especially employees in health care and education. Nearly 75% of higher-ed employees with student loan debt self-identify as debt-constrained.4 In health care, 76% of employees with student loan debt and less than five years’ work experience said it would be “very valuable” to them if their employers offered debt management assistance programs.5
Thanks to the
“If someone is struggling with debt, they often can’t afford to save for retirement.”
– Chianoo Adrian, TIAA
Another option outside the plan helps students overcome a big barrier to debt repayment. Public Service Loan Forgiveness (PSLF) is a federal program designed to reduce the burden of student loan debt for people with government and nonprofit jobs. The application process is complicated, so TIAA has partnered with Savi, a registered public benefit company, to help PSLF applicants navigate the program’s complicated rules and paperwork requirements. The cost for employees is $70 a year.
The cost to use Savi is worth it, says Adrian, because the application process is so complex. The success rate for applicants seeking PSLF debt relief on their own is only about 2.3%,6 versus 98% for those using Savi’s Essential service.7 “About one-third of our participants have student loan debt,” she says. “This could lower their monthly payment from $300 to $150, and after 10 years, the loan could be forgiven altogether.”
Saving and planning
Most large employers offer some routine investing advice as part of their workplace plan, but there’s room to do more. That was the case at University of Kentucky before Richard Amos came aboard as the university’s chief benefits officer in 2016.
Amos expanded the number of saving and planning benefits available to University of Kentucky’s 21,000 employees. “The data show that financial well-being affects people’s mental and emotional health,” says Amos. “It weighs on them at work, it weighs on them in general. So the more of a financial plan employees have, the more in control they’ll feel.”
“The more of a financial plan employees have, the more in control they’ll feel.”
– Richard Amos, University of Kentucky
One of University of Kentucky’s newest initiatives is something called UK Invests. UK Invests started out as program for students: Students open a brokerage account through one of the university’s financial partners and receive a 10% savings match, up to $300, if they complete tasks like a financial literacy course or meet with a financial advisor. Based on UK Invest’s initial success with students, the university will begin rolling the program out to employees this fall.
Financial protection
Insurance—life, health, long-term care, etc.—is the most familiar type of financial protection. Another less well-known type is a
Financial protection helps mitigate an all-too-common source of financial stress: the unexpected expense. The car needs a new transmission. A family member makes a pricey emergency-room visit. A spouse loses their job. Because unexpected events can have disastrous effects, most financial advisors urge people to maintain an emergency fund large enough to cover three to six months of expenses.
“A small step forward is better than no step forward.”
– Chianoo Adrian, TIAA
Unfortunately, many people fall well short. According to the TIAA Institute, only 42% of college and university employees have enough nonretirement savings to cover even one month of expenses, never mind six. The percentage is even lower for employees under age 40.8
To address this, some financial wellness plans offer tools that help employees build emergency savings. Delta Airlines, for instance, started matching $250 of employee contributions to a short-term savings account in 2023, according to a TIAA Institute report.9
“It’s important that employees have enough savings to withstand small financial shocks,” says Lusardi. When they don’t, she says, they sometimes pull money from retirement accounts or stop contributing altogether. “They can make poor decisions because of financial worries. Financial education in the workplace is a win-win for everyone.”
Next step: engagement
The biggest challenge with any financial wellness service is getting employees to use them, Amos says. He’s optimistic the financial incentives built into UK Invest will lead to meaningful improvements in employee financial literacy. “There’s an element of throwing spaghetti at the wall to see what works and what doesn’t,” says Amos. “There’s a lot of positive excitement this one will stick.”
While it’d be wonderful if everyone prepared monthly budgets and followed them to a T, the reality is most don’t and won’t. Behavioral finance principles can help address overspending from a different angle. “People reject the idea of budgeting, and there’s a lot of joy in spending,” Adrian says, noting TIAA’s financial wellness offering includes budget worksheets and similar tools, which tend to be underutilized. “So we asked ourselves: How do we help people
So now a new TIAA tool called “The Joy of Spending” is available to plan participants on the TIAA app. The tool walks employees through a series of questions designed to determine the amount of joy they derive from various types of spending. If Jane gets more joy going to Starbucks with friends than she does burning off steam on the treadmill, the suggestion might be to continue enjoying her daily caramel macchiato—but also to quit her expensive gym in favor of the local YMCA.
“It’s just a different method for finding ways to manage finances,” Adrian says. “A small step forward is better than no step forward.”
Three questions at the heart of effective financial wellness programs.
1. What are your employees’ financial concerns?
Are they struggling to with day-to-day finances or bigger issues like repaying debt, buying a house, paying for college or something else? Chances are it’s all of the above. To help prioritize the needs you want to address, look at data around retirement plan loans and withdrawals. That data, coupled with anecdotal feedback, can help focus financial wellness on the right areas.
2. What’s the best way to reach your employees?
Naturally, the nature of work and an organization’s culture will dictate how you deliver financial wellness. A 24/7 operation like health care might need to use staff meetings to get the attention of busy employees, while other institutions might use incentives to encourage attendance for a lunch-and-learn program.
3. How will you know if it’s working?
Decide at the start how you’ll measure your program’s effectiveness. Fewer loans and withdrawals from the retirement plan, fewer calls from financially worried colleagues and post-event satisfaction surveys are a few ways to track success.
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1 “Connecting Financial and Mental Well-being: Insights for Employers,” TIAA Institute, March 2024.
2 “New Insights for Improving Financial Well-being: The 2024 TIAA Institute-GFLEC Personal Finance Index,” April 2024.
3 Ibid.
4 “Financial Literacy and Financial Well-being Among the Higher Education Workforce,” TIAA Institute, October 2022.
5 “The Health care Sector Workforce: Financial Wellness, Retirement Readiness and Job Satisfaction,” TIAA Institute, February 2022.
6 Education Data Initiative, October 2023.
7 Savi, 2023.
8 “Financial Literacy and Financial Well-being Among the Higher Education Workforce,” TIAA Institute, October 2022.
9 “Connecting Financial and Mental Well-being: Insights for Employers,” TIAA Institute, March 2024.
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This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.
Savi and TIAA are independent entities. A portion of any fee charged by Savi is shared with TIAA to offset marketing costs for the program. In addition, TIAA has a minority ownership interest in Savi. TIAA makes no representations regarding the accuracy or completeness of any information provided by Savi. TIAA does not provide tax or legal advice. Please contact your personal tax or legal adviser. Results experienced may not be typical of all Savi clients and users. Individual results will vary.
TIAA Institute is a division of Teachers Insurance and Annuity Association of America (TIAA), New York, NY.