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Workers over 35 are increasingly worried about their financial health. They fear that persisting student loan debt is inhibiting their ability to save effectively for retirement.
“Student loans will affect almost all Americans over the age of 35,” Balaji Rajan, chief executive officer of debt solution management provider IonTuition, told Bloomberg BNA April 12. Employees are struggling to meet their financial goals, and businesses have a unique opportunity “to help workers of all ages,” he said.
New research from IonTuition found that 60 percent of employees over 35 say student loan debt is hindering their ability to save for retirement.
Furthermore, in a survey of more than 900 student loan borrowers over the age of 35, IonTuition found that 37 percent had fallen behind on their student loan payments and 17 percent had defaulted on their student loans.
IonTuition found that 74 percent of of Americans over 35 who took out student loans are still paying them off, and for Generation X and baby boomers, “this is an unexpected burden,” Rajan said.
Nearly three-fourths of respondents did not expect to be repaying student loans at this stage of their lives, and among baby boomers alone, that number jumped to 94 percent, he said.For many baby boomer employees, the student loan debt was incurred because they have co-signed on a loan for either a child (71 percent), a spouse (21 percent) or a grandchild (4 percent). Respondents took on this debt because the borrowers either did not qualify on their own because of low credit scores, had already maxed out their federal student aid debt limit or were falling short of tuition costs, IonTuition found.
The help has continued past just accessing the loan, however. Over 70 percent of Generation X and baby boomers have had to assist with payments, and 48 percent of respondents said they are concerned that the borrower for whom they co-signed might not pay back the loans, Rajan said.
Getting to the root of financial wellness support requires employers to consider a couple of dynamics for why employees are experiencing distress, Jeff Tulloch, vice president of MetLife’s PlanSmart organization, told Bloomberg BNA April 13.
One factor may just be that an employee’s income-to-expense ratio leaves them with zero disposable income. But employers also have to think about the behavioral choices that could leave employees anxious about their finances, Tulloch said. For example, “It feels good to spend money,” whether it’s a new pair of shoes, going on vacation or even going out to dinner, he said.
“The starting point is for employers to step back and realize that those two dynamics are in play” as they look to assess the best financial wellness program. Education programs are a great place to start, Tulloch said. Most employees “have never had any level of financial education,” and becoming informed can reduce the fear, stress and anxiety about saving for retirement or solving financial needs, he said.
But every employee has a unique set of financial needs, so employers also will need to explore ways to motivate employees to make health financial decisions beyond just financial education, Tulloch noted. “It’s not just offering solutions and benefits and tools to employees, but going beyond that and promoting and communicating what is available to employees,” he said.
“There’s a real win for HR” in succeeding at communicating effectively with employees about these benefits, Tulloch said. “At the end of the day, education plus motivation plus access equals the action” to be more financially healthy.
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