Traditional 401ks are just not enough to satisfy the needs of our hardworking employees anymore. Many are living paycheck to paycheck with 28% of employees completely running out of money between paychecks. Others are working side gigs just to help stay afloat. What we offer as employers is not working and needs to change. And, as someone who was not only the person administering 401k loans and hardships but also someone whose younger self had to take them to make ends meet at a hefty price of a 20% tax penalty, maybe they were never the complete solution. There just has never been a better time for chief people officers to look beyond a standard paycheck and traditional 401k programs to help solve these issues for our people. Let me tell you why.
For many years, wages, pensions, and retirement accounts were enough to keep our economy humming. We had the benefit of solid social security, strong 401k offerings, and incredibly low inflation and high employment for the most recent decade or so, giving hardworking employees adequate tools to survive and even thrive.
But the foundation on which working people have relied has started to crack. Soaring inflation, high cost of living, and financial instability resulting from a volatile job market are strong forces impacting the employees in our workforce. Sixty percent of employees today are stressed about their finances, well above concerns about global uncertainty, climate change, safety, and housing. Financial stress and money worries have a negative impact on sleep, mental and physical well-being. So it’s not a stretch to see how without financial well-being, employees are distracted and therefore less engaged at work.
During the pandemic, we collectively addressed mental wellness with new and different benefits in response to that crisis. This is where we as HR professionals and employers’ must again innovate our benefits offerings to reflect the reality our employees are facing.
With more than 30 years, working in many different industries with hundreds of thousands of employees, I can tell you that we are missing some key elements that we see employees desperately need: financial guidance, auto-save options, and behavioral incentives to avoid spending money (think old-fashioned Christmas club like behavior), and liquidity TODAY, not only for future stability.
Stash, where I serve as chief people officer, is one of the leading fintechs serving middle-income Americans with wealth-building tools. We’ve been doing this since 2015 and up until now, we have been going directly to consumers to give people the ability to set aside whatever they could afford to save for the future or a rainy day. And it really works: One in five Stash customers, who work for employers such as Wal-Mart, Amazon, Uber, and the U.S. Military, set aside more than $1,000 in the first six months alone.1
Why does it work? Because our customers learn by doing, with the support of our financial guidance which helps them develop good habits and make choices that are in their best interest. Because we promote healthy habits and encourage them with rewards that can grow over time.
So now, with StashWorks, we’re now delivering that same flexible benefit to employees, through the company they believe in and trust. We know that developing a saving habit is akin to losing weight—a little bit each week adds up quickly—so we tweaked our standard offering, and now help employers offer their employees motivating rewards for ongoing saving streaks when they sign on and deposit into their Stash account.
New partners from across industries seeking innovative solutions—retail, hospitality, customer service, tech, and beyond—have joined us, proving that the market exists and it’s easy to take advantage of. Employees can still choose retirement savings as soon as Day 1, and they can also just as easily save for a rainy day, with liquid funds that are easily accessible. Stash can help employees avoid 401k loans or hardship withdrawals to get through a money emergency. We know setting aside money, directly via paycheck contributions, works wonders. People who Auto-Stash (or systematically set aside a few dollars on a “set-it-and-forget-it” method) for a year have 40% more set aside than those who don’t, and those who have made at least one Auto-Stash investment average more than $3,800 after five years.2
According to Mercer, 37% of HR and risk professionals are concerned that rewards packages are not meeting the needs of their workforce. It’s time we all came together and recognized that what we are offering our employee base is not sufficient. We can do better, and we will.
1 Based on Stash internal data as of March 30, 2023. “Set Aside” is defined as complete incoming transfers from external funding sources to Stash across all brokerage and banking accounts. This statistic does not take withdrawals into consideration.
2 Based on Stash internal data as of February 29, 2024. “Set Aside” is defined as complete incoming transfers from external funding sources to Stash across all brokerage and banking accounts. This statistic does not take withdrawals into consideration.
StashWorks Saving Streak Rewards are subject to terms & conditions.
