Turning the Corner: From Financial Challenges to Financial Confidence

Nov 19, 2021 | Uncategorized

By Kirsten Hunter Peterson, Director, Thought Leadership Fidelity Investments

Looking back over the past 18 months, it’s been a challenging time for all of us. But some of us have struggled more than others during this period. A recent Harvard Business School study found that women were almost twice as vulnerable to pandemic-related job loss as their male counterparts1. Families are struggling with caregiving responsibilities and balancing obligations both at work and at home. In September 2020, nearly 7 in 10 workers said they had experienced at least one major life event in the previous six months, such as losing a family member or beginning to work from home full time2. All of these challenges require significant emotional or financial resources, which can take a toll on well-being.

But there’s good news—employers are stepping in to help.

Finances are a major source of stress for workers. And we know that when employees are stressed, it can impact their health, reduce their productivity, and lead to lower satisfaction at work.

This is an opportunity for employers to make a real difference in the financial well-being of their workforce. The financial impact of the pandemic became a catalyst for employers to get more involved and adapt swiftly to meet their employees’ needs. Today, businesses are stepping up like never before to help employees address and manage their financial challenges and their overall well-being.

Let’s close the retirement savings gaps.

About 50% of private-sector workers in the U.S. don’t have access to a workplace retirement plan like a 401(k). Most of these workers are employed by small businesses, are self-employed, or identify as gig workers. Those in the retirement-coverage gap are disproportionately women and people from underserved communities. Further, employment statistics show that women are more likely than men to work part-time, or to maintain several part-time jobs, often leaving them ineligible for a workplace retirement plan.

However, this picture is becoming more positive. Over the past 10 years, the number of women in the workforce has increased tremendously, increasing their access to retirement plans and facilitating stronger savings rates. Today, the average retirement plan account balance among women is nearly 80% higher than it was a decade ago3.

Despite the financial challenges the pandemic has presented, our research shows it has been a catalyst for many women to become more engaged with their finances. In fact, two-thirds of women said they are now more engaged with managing their money than they were at the onset of the pandemic4. Engagement is key to increasing financial confidence and making better financial decisions, so it’s an opportune time for employers to harness this momentum to help put women on a path to improving their financial wellness and retirement readiness.

A big help for small business employees and owners.

Recently, the SECURE Act created “pooled employer plans,” or PEPs, a new type of 401(k) that allows multiple, unrelated employers to participate in one plan. Other options exist for small businesses, too, like SIMPLE and SEP IRAs and a self-employed 401(k), but the PEP structure allows smaller companies to participate in a retirement plan with the same retirement provider (the “pooled plan provider”). For Fidelity, it allows us to offer our Fidelity Advantage 401(k)SM, a simple, affordable 401(k) plan for businesses that want to offer a retirement benefit for the first time. It also allows a financial provider to serve as the plan sponsor, instead of the individual employer, which reduces much of the administrative work businesses usually take on when they offer a workplace retirement plan.

If a small business has never offered their employees a 401(k) before, a PEP could be a good option to get started. And because small busines owners can also participate in their 401(k), it gives them a great way to save for their own retirement, too.

A boost for recruiting.

In this ultracompetitive job market, offering a 401(k) plan can be a substantial help to small businesses as they strive to recruit and retain valued employees, especially younger workers, who make the availability of workplace benefits an important consideration in their decision-making.

A boost for the future.

Of course, a retirement account is also a great way to introduce people just starting their career to investing, or to further build their long-term savings portfolio. Small businesses have the opportunity to put their employees and the broader workforce on a better path to financial security by offering a way to save effectively for the long term and live out the retirement they want.

To learn more about how a 401(k) built for small businesses can help make retirement savings a reality for your employees—and yourself—visit Fidelity Advantage 401(k).

[1],2 HBR, Don’t Let the Pandemic Set Back Gender Equality, September 2020. (eReview #967862.1.0)

3 Tyler Bond, Joelle Saad-Lessler, PhD, and Christian E. Weller, PhD. “Still Shortchanged: An Update on Women’s Retirement Preparedness,” May 2020.

4 Based on Fidelity analysis of 23,300 corporate DC plans (including advisor-sold DC) and 19.0 million participants as of 12/31/2020

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