How financial wellbeing benefits can reduce pension anxiety
It has been suggested that humans are the only species that spend time thinking about the future. Although this has many advantages, one major downside is that people can suffer high levels of anxiety even when there is no immediate threat.
Anxiety can help us focus or take extra care. But when it gets too much or goes on too long, it can affect every aspect of our lives, including our health, relationships and working lives.
It’s little surprise in today’s fast-paced world that pioneering organisations are focusing on employee wellbeing programmes. These include colleagues’ financial health because of the impact that major money worries can have on workplace performance.
Cash management
Day-to-day personal cash management issues are what can be considered ‘known knowns’. We all have an understanding about what steps are needed to balance our income and spending, even if some apply that knowledge better than others.
While some employee financial wellness programmes help to deal with short-term money issues, research suggests the overriding worry for employees across the age groups is what could be called the ‘known unknown’ of retirement.
Life after work is something we can all see coming but we tend not to think about too much. Despite being provided with useful resources – such as state and workplace pensions – to help us prepare financially, most of us are confused by the rules and the jargon that come with pensions.
As a result, many people find it hard to form a holistic view of where they stand or what all the different parts of the pension puzzle mean to the overall reality of life beyond work.
Retirement worries are universal and include younger employees, although concerns are probably most intense among employees aged 45 plus, as the desire to know how prepared they are for the future becomes more urgent.
Hands-off approach
Employees have the option to engage with their pensions, but the reality is that most take a hands-off approach. Their contributions are set by the employer and their pensions accumulate automatically, often in default investment funds.
That means big questions such as whether they are saving enough or how they ensure they don’t run our of money are never even asked. It’s not surprising that many people default into retirement rather than it being the result of a well-executed plan.
See the future clearer
The best modern financial wellness programmes help people cope with retirement anxiety in two ways. First, they offer a vision of the future so that people can picture the retirement they want and whether they are on course to achieve it. And, second, they offer the advice and services needed to move into and through retirement.
Hub Financial offers services to help both those employees who are years from retirement and want to see how their pension planning is going as well as those closer to taking pensions and require regulated financial advice.
Retirement planning troubles a large proportion of older employees because many don’t feel prepared to retire or able to give up work when they want. Research from 2019 suggests more employees (31%) are concerned about funding their retirement than paying off debt (27%), coping with a reduction in household income (23%) or making their money last until payday (19%).
While there is a strong case not to lose their knowledgeable, experienced workers, that same research also found that nearly half (48%) of employers reported fewer staff retiring than they would like, which is pushing up costs and negatively affecting succession plans.
Colleagues who know they have a plan are more likely to leave the workforce than those who hang on to the last minute trying to save every last penny of income.
Modern life is challenging enough without fretting about retirement. Let’s seize the chance to help people think about the future with confidence rather than consternation.
Supplied by REBA Associate Member, HUB Financial Solutions
We are totally focussed on finding the right financial solutions for people approaching, or in, retirement. We don’t do anything else. Our purpose is to help people achieve a better later life.
