To address financial strain caused by the pandemic and make themselves more competitive to employees, many employers are offering financial wellness benefits beyond typical retirement plans. Today's financial wellness benefits include emergency savings accounts, student loan repayment, help paying for college or buying a home, free financial planning and more. Here are 11 financial perks your employer may offer to boost your financial health.
What Are Financial Wellness Benefits?
Financial wellness perks are employee benefits that help you save money, make money or better manage your money. Taking advantage of these perks can help you boost your income and reduce expenses without getting a raise or changing jobs. The most common financial benefits are retirement plans and safety net insurance, such as life and disability coverage, according to the Society for Human Resource Management.
1. Employer-Sponsored Retirement Plans
Many employers often provide retirement plans that match your contributions up to a certain amount, essentially giving you free money for retirement. Contributions made before tax, as with a 401(k) plan, can reduce your tax bill by lowering your taxable income. A common rule of thumb suggests you save at least 15% of your gross income for retirement. If your budget won't allow that, at least try to contribute enough to max out any employer match.
2. Workplace Life Insurance Plans
Some companies offer employees a limited amount of term life insurance at little or no cost. It's called group term life insurance because it insures members of a group (you and your co-workers).
3. Disability Insurance
If you become disabled and can't work, disability insurance offered through your job replaces a percentage of your income. Employers often provide a certain amount of short-term and/or long-term disability coverage.
Employer-provided life and disability insurance is limited, so you'll generally need to purchase supplemental coverage on your own or through the group plan. Before buying insurance through your group plan, make sure you can take it with you if you leave your job.
4. Emergency Savings Funds
Emergency financial assistance may take the form of payroll advances or short-term loans, which can be a cheaper way to borrow compared with using high-interest credit cards or payday loans.
A newer form of emergency savings assistance, called an emergency savings account (ESA), deducts money from your paycheck and puts it in a savings account. Unlike 401(k) contributions, this money is taxable, but you can access it any time without penalty.
5. Student Loan Assistance
Realizing student loans burden many employees, a growing number of employers are willing to offer help. Some provide counseling to help you understand and apply for options such as student loan deferral, forbearance or refinancing. Other companies, including Fidelity, Aetna and New York Life, help repay student loans, typically by matching your payments up to a certain amount.
6. Financial Education and Planning
Some 35% of employers offer financial planning assistance and 24% offer financial coaching, according to the Society for Human Resource Management.
Financial planning provides access to financial advisors who can help you develop an overall financial plan including retirement savings and investing. Financial coaching helps you manage your personal finances, such as budgeting and managing credit. If you're struggling with debt, a financial coach might provide credit counseling and devise a debt management plan.
7. Family-Related Financial Assistance
Many employers offer financial assistance with child care and eldercare, including stipends, discounts or on-site care. A growing number pay for fertility treatments, egg-freezing and adoption expenses. For instance, Amazon pays attorney fees, court costs and travel costs for qualified adoptions. Microsoft offers subsidized and discounted child care, and backup care for children, adults and elders.
8. Education Costs
Whether you want to continue your education with a certification or degree, some employers foot the bill. Usually, the program must relate to your job, but not always.
For example, accounting firm Deloitte has a Graduate School Assistance Program that sends select employees to business school. If they return to Deloitte and work for two years, they're reimbursed for tuition. Amazon pays full college tuition at certain schools for qualifying employees, as well as high school completion, GEDs and ESL proficiency certifications.
9. College Fund Assistance
In addition to paying for your education, some companies help with your children's college tuition. This may take the form of advice or assistance applying for financial aid. Your employers may even contribute to your 529 plan, which is an investment account that's used to pay for qualifying educational costs. Unlike 401(k) matching contributions, however, these employer contributions are taxable.
10. Home Buying or Rental Assistance
Employer-assisted housing programs help employees purchase or rent homes. Some programs provide education and advice about homebuying and mortgages. Others contribute financially with:
- A loan: The employer lends you money for a down payment and/or closing costs. Sometimes the loan is forgiven after you work at the company a certain number of years.
- An interest rate buy-down: The employer pays the lender to provide a lower interest rate to the employee.
- A mortgage guarantee program: The employer agrees to pay your mortgage if you can't.
- A matched savings plan: The employer matches your contributions to a savings fund earmarked for a home down payment.
- Rental assistance: The employer provides a stipend for a security deposit or helps with a portion of the monthly rent.
11. Legal Assistance
Whether you're getting a divorce or fighting a traffic ticket, legal issues eat up time and money. Employer-sponsored legal plans give you access to attorneys to help with everything from estate planning and real estate transactions to family law or identity theft. Although joining the plan may cost money, services for covered legal needs are often free.
Make the Most of Financial Wellness Benefits
To maximize your financial wellness perks, clarify the terms of the assistance. Ask for information such as the following:
- What is covered and what are the limits of the financial assistance?
- Will you be reimbursed or will your employer pay upfront?
- What are the eligibility requirements (such as working X number of years)?
- What are the tax implications?
- What happens if you leave your job? Will you lose funds or have to repay a loan?
Other Ways to Improve Your Financial Health
If your employer doesn't offer much in the way of financial benefits, making these smart moves can shore up your financial wellness.
- Open an individual retirement account (IRA).
- Build an emergency fund using automatic transfers from your checking account into your savings account every payday.
- Whenever you get a raise, put the money toward retirement, an emergency fund, reducing debt or saving for a big goal.
It's also wise to set up free credit monitoring to track your credit score and get alerts of changes. Protecting your credit is key to financial wellness. Experian can help you do this for free.