Financial wellness plan can help pave the road to retirement

If we have learned a lesson in the past year, no matter how carefully we plan and prepare, we are likely to encounter unexpected hurdles. While a global pandemic has certainly underscored the need to pay close attention to our physical wellbeing, it has also highlighted the need to sustain our financial wellbeing.

According to PwC’s 9th Annual Financial Wellness Survey, conducted in January 2020, financial matters were the number one source of stress for employees long before the pandemic broke out in earnest. More than a third of full-time Millennials, Gen Xers, and Baby Boomers had less than $ 1,000 in emergency savings. Only 29% of women said they would be able to meet their basic needs if they were unemployed for an extended period, compared with 55% of men. And more than half of Millennials and Gen Xers, and 35% of Baby Boomers, said they would likely use their retirement savings for something other than retirement, with most noting that it would be for unexpected expenses or medical bills

Using your retirement savings can help you out of a crisis, but it will affect your ability to afford a comfortable retirement. Having a plan to protect your financial well-being during your working years can help you avoid putting your retirement at risk.

What is Financial Wellbeing?

The Consumer Financial Protection Bureau (CFPB) defines financial well-being as: 2

  1. Control over daily and monthly finances. To do this, your expenses must be less than your income.
  2. Maintaining the ability to absorb a financial shock. This usually relates to adequate emergency savings and insurance.
  3. Being on track to meet financial goals means that you have either a formal or informal plan to achieve your goals and that you are actively pursuing them.
  4. You have the financial freedom to make choices that enable you to enjoy life such as: B. have a nice vacation.

The CFPB has identified several key factors that contribute to an individual’s ability to achieve financial well-being. This includes (1) the skills required to find, process, and use relevant financial information when needed, and (2) demonstrate daily financial behavior and saving habits.

Assistance is available

Many employers have started offering financial wellness benefits in the past decade. These programs have evolved from a focus on basic retirement readiness to those that address more general financial challenges such as healthcare costs, general finances and budgeting, and credit / debt management

Additionally, a finance professional can become a trusted coach all your life. A qualified finance professional can provide an objective view of third parties during difficult times and can help you anticipate and overcome challenges and risks, and most importantly, stay on the path to a comfortable retirement.

1) PwC, May 2020
2) Bureau of Consumer Financial Protection, January 2015
3) Employee Benefit Research Institute, October 2020

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