Financial wellness refers to the overall financial health and stability of an individual, including their ability to manage finances, handle unexpected expenses, and save for the future. This involves making informed financial decisions, setting financial goals, and adopting healthy financial habits.
As an employer, you play an integral role in helping employees navigate the choppy waters of financial health and well-being. Empower employees with resources and guidance in helping them be financially prepared now and in future years. Many have powerful savings tools at their fingertips they may not even be aware of, or think it's "too complicated." AHealth Savings Account (HSA)is one of those tools that offer triple tax advantages and is often misunderstood.
Financial wellness is like a roadmap that guides us through different stages of life, from the working years to retirement. Setting a savings goal is the first step towards achieving retirement readiness. According to data from Northwestern Mutual, $1.27M is the current figure needed to achieve a comfortable retirement.
Why Does it Matter?
Understanding this figure can serve as a helpful benchmark to evaluate financial progress on the road to retirement. It can serve as a guide in setting realistic savings goals and making adjustments to investment strategy if necessary. Ultimately, knowing where you stand can provide peace of mind and help you make informed financial decision now and in future years.
Steps to Get There
To help employees plan for retirement, share with them the $1.27M figure and provide education about products and investments at their disposal in your employee benefits portfolio. Here are a few more suggestions to help improve their preparedness for retirement.
Start Early: The earlier you begin saving for retirement, the more time your money will have to grow through the magic of compounding interest.
Maximize Contributions: Take full advantage of tax-advantaged retirement accounts like 401(k)s or IRAs. Consider contributing the maximum allowed amount each year.
A Health Savings Account (HSA): can be one of the best accounts for saving for retirement. Not only can you invest your HSA and potentially capitalize on tax-free growth, but your HSA also delivers powerful tax advantages you can’t find anywhere else.
Diversify Investments: Don't put all your eggs in one basket. Diversify your investments to spread risk and potentially enhance returns.
Pay off Debt: Reduce debt as much as possible before retirement. High-interest debt can eat into retirement savings.
Saving for retirement is an important financial goal for many Americans. The amount needed for retirement can vary depending on individual circumstances, such as lifestyle, expenses, and retirement age. While $1.27 million may be a target for some individuals, it's important to consider factors such as inflation, investment returns, and potential healthcare costs. It's always a good idea to consult with a financial advisor to determine the appropriate savings and investment strategy for retirement goals.
Remember, financial wellness is about finding a balance between preparing for the future and enjoying the present. Taking an active role in making sure your employees are knowledgeable in what goes into the process can build trust, leading to increased productivity, and positively contributing to your bottom line.
Be a hero to your employees! Need help turning confusion into clarity?
Contact Koppinger & Associates for assistance in creating benefit plans that add value to employees' lives.