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Your employer may be able to help you save for healthcare, pay down student debt and manage caregiving

MarketWatch logo MarketWatch 5/21/2021 Charlie Nelson
a person standing in front of a building © Getty Images
a person standing in front of a building © Getty Images

We’ve all “put away money for a rainy day,” which can often be referred to as “emergency savings.” Few will argue that this isn’t important — particularly coming out of the past year.

COVID-19 placed a spotlight on these needs — as more than half (53%) of Americans planning to make saving more for a possible emergency a priority in 2021 compared to 2020. But, when it comes to saving, the reality is that the financial demands of many individuals today are competing with the financial outcomes of their future. So a popular question among those challenged with competing priorities is this: How do I find a way to save and where do I spend my next best dollar?

Finding the right support can play an important role in helping achieve your goals, and, increasingly, the answers can often be found with your employer. Here are a few common challenges and areas to seek help.

Health savings, near and long term

COVID-19 underscored the need for American workers to be better prepared for health expenses. A health savings account (HSA) can offer several benefits for both short and long-term health care savings. For anyone enrolled in a high-deductible health plan (HDHP), HSAs can help you address immediate health costs as well as the ones you’ll have later in life when you retire.

Faced with a short-term, unexpected need — such as a high deductible from a trip to the hospital — many people are often forced to dip in to their retirement savings. Fortunately, funds in an HSA can double as an emergency savings account. HSAs have the potential to offer triple tax benefits: contributions, investment gains and withdrawals are not taxed, if qualifying distribution criteria are met. Plus, when enrolled in a HDHP and HSA, you can choose to leave your funds in your HSA and, instead, cover a medical bill “out of pocket.” This strategy is one way HSAs can serve as a potential emergency savings vehicle for unexpected health care costs. Since HSA funds roll over each year, many HSAs also offer investment options that can give you opportunities to invest in long-term investment funds, such as stocks.

Paying down student loan debt

According to recent Federal Reserve data, U.S. student loan borrowers owe a total of $1.7 trillion in student debt. Now considered one of the highest consumer debt categories — next to mortgage debt, and higher than credit cards — the latest statistics indicate how serious the student loan debt crisis has become for borrowers, including those nearing retirement. Of the total student debt, a recent AARP analysis showed that, at the end of 2020, borrowers 50 and older owed about $336.1 billion, showing that the impact student debt has on one’s paycheck can really prevent individuals from saving not just for emergencies but could also be putting a dent in a retirement plan.

To help offset the costs of student loan debt, one place working individuals should look for support is their employer. Today, many companies offer support in this area, with some student loan repayment assistance. Within this model, employers make direct after-tax contributions or loan payments to the servicers of their employees’ student loan debt. This solution can help individuals pay down their debt more quickly — and, in turn, enable them to save more for short-term needs, like emergency savings.

Caregiving during COVID-19 and beyond

For many caregivers, the routine tasks they perform on behalf of their loved ones became more complex — and costly — in recent months. According to the National Alliance for Caregiving and AARP, about 19% of Americans serve as an unpaid caregiver for another adult — and of these unpaid caregivers, 61% are employed.With the enhanced demand on the type of care provided, COVID-19 has caused even more strain for these individuals.

For those faced with caregiving challenges, seeking employer support can be overlooked, but many companies have realized that this strain could have a tremendous impact on productivity and mental health and are providing resources to help. Employee assistance programs offer help for a variety of personal situations such as flexible work arrangements and stress management seminars. In addition, working with a financial professional can provide insights into financial solutions that can help address multiple and unique challenges.

More than before, individuals are focused on the importance of emergency savings, and they are continuing to look toward their employers for guidance on how to prioritize their spending and manage debt.

Emergency savings, HSAs, student loan debt and even caregiver-support services are all examples that are growing in popularity today given the complex and increasingly holistic wellness needs of individuals. When these cornerstones of a budget are under control, you’ll become more prepared to address your short- and long-term health and wealth needs.

Charlie Nelson is vice chairman and chief growth officer of Voya Financial, Inc., which provides health, wealth and investment solutions to individual, workplace and institutional clients.

Data outlined in this release, unless noted otherwise, is based on the results of a Voya Financial survey conducted through Ipsos on the Ipsos eNation omnibus online platform among approx. 1,005 adults aged 18+ in the U.S. Research was conducted Dec. 17-18, 2020. This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial advisor for specific advice about your individual situation. Products and services offered through the Voya® family of companies. Registered Representative of Voya Financial Partners, LLC (member SIPC).


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