Four Benefit Trends in 2018

Employers have been dancing around financial benefits for several years now, but recent trend shifts show more benefit offerings that largely fall under the umbrella of financial-wellbeing. This trend is largely driven by student loan debt, which now impacts about 44 million borrowers.

In total, Americans owe more than $1.45 trillion in student loan debt – which is approximately $620 billion more than the total U.S. credit card debt. In 2016, the average graduate matriculated with $37,172 in student loans with a monthly bill averaging $351.

As you can imagine, most graduates getting their first job have a hard time meeting expenses for rent, utilities, food and transportation – let alone another $300-plus in student loan payments. In fact, a recent survey by PwC found that about 35 percent of Millennials, 30 percent of Gen X and nearly half of Baby Boomers admitted that student loan debt has had a significant impact on their ability to meet other financial obligations.

1. Financial Advice
While student debt is an issue employers are trying to address, it's merely a symptom of a greater malady. That is, a general lack of understanding with regard to household financial management, saving and investing. Colleges are sorely lacking in helping young adults learn basic financial concepts such as how interest rates affect their savings and purchases, the short-and long-term impact of taxes, and how the economy and inflation can affect consumer buying power.

These are lessons most adults learn empirically through a lifetime of experience. However, absent rich pension plans and retiree healthcare plans, workers need to learn these lessons earlier so they don't make mistakes as young adults that affect their long-term security.

The fact is, financial education initiatives in the workplace are generally embraced by workers of all ages. According to a recent poll by the Society for Human Resource Management (SHRM), employers have increased financial advice benefits of all types from 37 percent five years ago to 49 percent today, including:

• Investment planning (50%)
• Individual retirement planning (48%)
• Retirement-preparation advice (44%)

While mid-career and older workers are usually keen to take advantage of financial benefits, Millennials are surprisingly receptive as well. Having witnessed first-hand what their parents went through during the Great Recession, many are interested in learning how to invest effectively and protect their savings for the future. Millennials in general exhibit a certain pragmatism in delaying getting married, buying a home or starting a family until they've got more assets under their belt.

This practical approach to finances has employers scrambling to find ways to recruit and retain young talent. Today's corporate environment is less conducive to long-term loyalty, and with fewer young adults tied to a mortgage and their children's school district, they are more mobile and likely to keep looking for new job opportunities.

With that said, the biggest appeal for many recent graduates is help paying down student loans. However, only four percent of SHRM members say they offer a student loan repayment program – largely due to the high cost and tendency for high turnover among younger workers.

2. Holistic Retirement Security
The concerning ramification of this new crisis of student loan debt is that it impacts, or at least delays, other financial decisions. For example, the longer a worker waits to purchase a first home, the less time he has to build equity over his lifetime. If workers delay too long, they may have to delay retirement until they can pay off their mortgages.

Student debt also curbs how much young adults feel comfortable contributing to a retirement plan. The younger the investor, the more time to benefit from compounded interest, so delays on this front are likely to produce a smaller nest egg by the time they retire.

There is a growing trend to offer workers a balanced combination of healthcare and retirement benefits. A common platform may include disability and long-term care insurance in an effort to produce a more holistic benefit package in lieu of a rich pension and retiree health insurance.

In fact, legislators in Washington D.C. are looking at ways employers can bolster worker retirement savings to mitigate some of the burden that will be placed on Social Security and Medicare programs. The following are ideas being explored:

• Employers contribute to a retirement savings plan an amount that would match what workers pay each month for their student loans
• Increasing the threshold for matching deferred pay up to 12%
• Making changes to preretirement distributions to further deter early withdrawals
• Expanding criteria for qualified distributions from health savings accounts to pay for healthcare needs in retirement
• Including a retiree healthcare account option within 401(k) plans
• More favorable tax treatment for lifetime-income options within 401(k) plans

3. Healthcare
Healthcare insurance continues to be the most expensive – but also the most sought-after – benefit among employer offerings. In 2017, the Trump Administration postponed the 40 percent excise tax on Cadillac-style health plans under the Patient Protection and Affordable Care Act. This has prompted many larger employers to continue offering Cadillac-style health coverage in order to compete in today's tight labor market.

Many employers continue to expand their wellness benefits as they are both popular among workers and relatively inexpensive to offer. One of the fastest rising benefits is providing workstations that allow workers to stand, which increased from 13 percent in 2013 to 44 percent today. Other wellness benefits on the rise are meditation and mindfulness programs designed to help reduce worker stress.

4. Work/Life Balance
Flexible work schedules continue to be popular. Millennials always ask for it, and mid-career professionals have benefitted from the demand. After all, while Baby Boomers may no longer have small children at home, more and more are being called up for elderly parent duty. Once again, their days may be filled with doctor's appointments and wait lines at the pharmacy, not to mention getting a senior "settled in" back at home. For many, they can get more done working from home with the flexibility to be available for eldercare needs.

A new trend in flex-scheduling is the "9/80" work week. This perk features working nine hours a day for the first week and then nine hours for four days the second week – which gives workers a three-day weekend every other week. These compressed workweeks are particularly appealing to Millennials and startups.

While not all employers are onboard with staff working from home, there is some evidence that workers can get just as much of their work – or more – completed at home (or whatever quiet internet café they prefer as an office).

Another legislatively-influenced benefit is paid leave of absence related to maternity and paternity. One of the challenges to extending these benefits is how to create parity for workers without children but who also may have need for extended time-off. For example, a worker diagnosed with cancer. Leave-of-absence benefits are expected to continue be complex, as they must be in compliance with local or state mandates for paid leave – which is a particularly challenging scenario for employers with workers across state lines.

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