The Senate GOP recently unveiled its ideas for reforming the nation’s tax system, including proposals to change income tax rates and the pretax amount employees’ could contribute to 401(k)s, reduce and make taxable 401(k) catch-up contributions, and eliminate or limit homeowners’ ability to write off state property taxes. Lawmakers currently are pushing toward a self-imposed Christmas deadline to send a bill to the president.
In the meantime, you and your team can prepare employees by providing financial literacy programs that can support them through whatever tax changes might be coming down the chimney. Here are four tips to staying on the benefits “nice” list:
Just like holiday sweaters, when it comes to financial wellness, one size does not fit all. It’s critical to take into account the different factors that shape employees’ financial priorities. A married Gen X father of three, for example, has different needs than a single Millennial woman pursuing her MBA.
As your organization looks to provide financial counsel, ensure communications are tailored and targeted for difference among specific audiences – education level, income, generation, life stage, family makeup, health status, and even more – when working on their financial wellness. Be sure to highlight the benefits and resources your organization offers that can support in managing their finances and achieving their financial security goals, whatever they may be.
Yes, it takes more work to parse employee communications in such a personalized way. However, this approach meets employees where they are and answers the “What’s in it for me?” question that every employee will ask.
Take a holistic approach
A key factor in driving financial wellness is setting and sticking to a budget – especially as the holidays arrive. Too often, people use credit cards to make ends meet or spend beyond their means, which can negatively affect credit scores and put employees’ ultimate financial goals, like homeownership, further out of reach.
An effective method to help employees think about monthly costs is the One Wallet concept, which recognizes that all expenses come from one finite amount of money. It’s easy to think, for example, that the cost of benefits doesn’t figure into employees’ monthly expenses. But it’s important to acknowledge that their benefits deduction – along with rent/mortgage, grocery costs, utility bills, and entertainment – all come out of the same “one wallet.” This approach allows employees to make decisions about spending and saving holistically, rather than through a siloed lens.
Offer support tools
Of course, how you implement a holistic “one wallet” approach and segmented communications depends on what is authentic to your culture and realistic to your budget. However, one universal tentpole for financial wellness should be offering support tools for employees (and their spouses/partners) to help them navigate benefits planning, budgeting, and enrollment with greater ease and confidence.
Selecting benefits can be both confusing and overwhelming – especially for younger employees who may be unfamiliar with complex benefits like HSAs and retirement plans, or with benefits altogether.
I’m not suggesting handhold them. But surely don’t let them go at it alone.
Instead, provide support tools to guide them. Advice at every step can help ensure an individual is set-up for financial success by selecting the right benefits and programs for their specific needs. Trust me; it’s the gift that will keep on giving.
When it comes to the pending tax reform legislation, assume employees don’t know what’s happening – if for no other reason than neither do any of the rest of us! Plans will change day to day, week to week as Congress bats its proposals back and forth. Many employees will be closely monitoring the news in search of an answer to that perennial question, “What’s in it for me?” However, that won’t be the case for all of your workforce.
Help tamp down water cooler wonderings and reduce confusion: Provide transparent and timely communications that inform and educate your employees about upcoming changes and how they could impact their financial planning and savings. Focus only on what you know for sure – not what may happen if something else happens first.
Having clear, accurate information as the legislative process plays out will make employees thankful long after the holiday leftovers are gone.