Providing a holistic benefits package to support employees at all stages of life, including family planning, can help enhance retention efforts and improve financial wellness.
By Maggie Mancini
Few events are as life changing as becoming parents. Embarking on parenthood – or simply planning for family growth – often makes employees look more deeply into their benefits packages in search of employer support for their financial well-being. Yet, less than 50% of companies currently offer paid parental leave, according to Barrett Scruggs, vice president of workplace financial well-being at SoFi at Work.
“Benefits like paid parental leave help boost employees’ overall wellness by reducing stress associated with having to choose between finances and time with their loved ones,” Scruggs says. He adds that new parents often want access to financial planning and counseling services to better equip themselves with the skills needed to manage their money efficiently when growing their family – including learning how to create savings funds for emergencies or future events, like their child’s college tuition.
There is often a gap between employees’ desire for holistic benefits and companies’ current offerings, Scruggs explains. According to a SoFi at Work’s study, The Future of Workplace Financial Well-being, only 55% of employees feel their company is concerned about their financial well-being, even though 80% of HR leaders say they are concerned about their employees’ financial well-being.
“As the workforce is constantly changing and people are facing new challenges outside of the office, like inflation and the cost of living, it’s important to regularly communicate with employees to overcomes these gaps and deliver the right benefits,” Scruggs says. “Tailoring benefits to meet the needs of a diverse workforce starts with understanding employees’ goals and the impact hat benefits offerings will have on their lives.”
Scruggs says that companies can come to this understanding through bi-annual employee surveys, financial wellness assessments, focus groups with critical talent, and data-driven analyses of current and past benefits offerings. Taking these steps, he says, will offer HR leaders a deeper understanding of their employees’ needs, enabling them to pinpoint the offerings that best serve their talent. Companies can also ensure that they’re offering benefits that support employees through all life stages, from starting a family to planning for retirement.
Scruggs explains that supporting employee well-being takes more than just basic health insurance and a 401K. It requires an understanding of their lives and careers, and for HR leaders to tailor their benefits programs accordingly.
Holistic benefits like paid parental leave policies can help level playing fields for both partners. With the average cost of raising a child now up to $237,482 in 2023, parenthood comes with many added stressors that can impact employee productivity, stress levels, and job satisfaction.
“Giving new parents time at home to grow their families without needing to worry about finances will contribute to greater productivity and lower stress levels overall,” Scruggs says. “These benefits also demonstrate that your organization not only values employees’ skills, but also their well-being as people.”
Research from SoFi at Work finds that 86% of workers say financial benefits impact their desire to stay with their employer. The ripple effect of a holistic financial well-being strategy on employee retention is clear – creating a culture of caring through the right benefits will help foster loyalty, engagement, and satisfaction, Scruggs says.
“Traditionally, financial well-being programs have focused on 401K benefits and education programs geared toward long-term savings and retirement,” Scruggs says. “However, it’s become increasingly apparent that benefits are not one-size-fits-all and shouldn’t be treated as such, especially in today’s multi-generational workforce.”
Scruggs explains that HR leaders offering a range of financial well-being benefits enables employees to choose what will help them and their loved ones the most. Not only do paid parental leave benefits offer greater flexibility in terms of growing a family, they also boost financial equity among both partners by ensuring parents don’t need to choose between financial well-being and family time – especially for mothers, who are at a higher risk of leaving their jobs due to stress.
“By offering paid parental leave as part of a holistic financial well-being strategy, you can help reduce this pressure and build equity for women by helping them stay in the workforce,” Scruggs says. “This is one step towards mitigating the effects of the gender wage gap and increasing mothers’ financial equity in the short term, while also increasing total household financial well-being in the long run.”
Financial well-being is one area where 84% of employees believe their employers should be offering more support as it impacts all facets of their life, especially for growing families. Scruggs suggests several benefits for companies to consider as part of a holistic program that promotes life-long financial independence.
- Offer access to a 529 savings plan. Also known as a qualified tuition program, a 529 plan allows a parent (or anyone else) to prepay a student’s college tuition or contribute to an education savings account, which is one of the most effective ways to prepare for a child’s future education.
- Set up an emergency savings fund. From sports injuries to fender benders, raising children is bound to come with surprise expenses. Allowing employees to contribute directly to an emergency savings fund helps instill financial preparedness so families can protect their finances against unexpected costs and hardships.
- Provide support for parents living with student loan debt. Starting in 2024, employers can start matching employee payments towards student loan debt with a contribution to their 401(k) or 403(b) retirement savings plan under the SECURE 2.0 Act. Employer contribution programs and benefits like tuition reimbursement enable parents to manage current financial obligations while planning for the future.
