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Short-term Savings! This includes savings related to: Increasing employee productivity and reducing absenteeism Lowering stress and associated health care expenses Reducing social security taxes through educating employees on exible benets accounts!
Long-term Savings!
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Related to helping employees not having to delay retirement, foregoing additional years of paying both disability and health care premiums
Short-term Savings!
In the short-term, each nancially distressed employee costs the employer $2,024 per year1. If you break that number down, it looks like this:!
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$450 in positive job outcomes, since nancially troubled employees are absent more than others and they waste more time at work dealing with personal nancial problems. Typically, at least two-thirds of employees deal with nancial matters at work. ! ! Another way to calculate costs related to reduced productivity and increased absenteeism is to assume that for every 100 employees on the payroll, a company loses 22.5 person days of productivity per year due to nancial distress.2!
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22%
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63%
15%
$300 in lower health care costs for each employee who improves his or her nancial behaviors and nancial well-being. These health care savings are due to a reduction in anxiety, insomnia, headaches, and depression, as well as an inability to afford or access recommended health maintenance practices and health care services.!
Positive Job Outcomes Lower Health Care Costs Tax Savings from Flexible Benets Accounts
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Employers Waste $750 to $2,000 Annually on Each Employee's Poor Money Management Behaviors, June 21, 2006: http://www.pfeef.org/press/press-releases/Employers-Waste-Money.html
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Why Employers Should Care about their Employees Financial Wellness by Paul Squires and Richard LoFredo; Oct 9, 2012: http://www.corporatewellnessmagazine.com/article/why-employers-should-care-about-their-employeesnancial-wellness.html www.RetiremapHQ.com
Long-term Savings
In the long-term, health care and disability income insurance premiums increase dramatically with age. Therefore, an older workforce that cannot afford to retire will cost the employer approximately $10,000 in insurance premiums per employee per year once an employee is in their mid-sixties, when compared with an employee in their 40s. However, older employees are not all downside and the positive qualities of older workers are documented in the Department of Labor research paper "Employer Strategies for Responding to an Aging Workforce3. A more appropriate employer cost should be estimated to be around $7,000 per employee per year, when factoring in the positive qualities of older workers.
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Therefore, it can be calculated that if a nancial wellness program can help an employee retire on time and not have to defer retirement for one year, an employer can realize a $7,000 savings per employee. Employee tenure once they reach 55 years old is approximately 55%. It can be assumed that roughly half of all employees in the 55-65 age range will retire at their current employer. If an employer just focuses on this group, they can realize signicant savings on the long-term expenses related to employees having to delay retirement. Other bottom line nancial wellness cost factors that are not included in the Retiremap ROI calculation, but bear mentioning, are:!
Garnishments!
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Employer costs for garnishments considers both the direct costs of the number of garnishments and the amount of payroll-staff time needed per employee to process garnishments. In the PFEEF calculator, garnishments appear to represent less than 5% of the employer cost savings.
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More Information
To learn more about Retiremap, please contact Matt Iverson at matt@boulevardr.com or 415.250.6727
Employer Strategies for Responding to an Aging Workforce, Francine M. Tishman, Sara Van Looy, and Susanne M. Bruyre; March 2012. http://www.dol.gov/odep/pdf/NTAR_Employer_Strategies_Report.pdf www.RetiremapHQ.com