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Are Your Employees Financially Fit?

Financial literacyAs in past years and with previous presidents, President Obama proclaimed this April as National Financial Capability Month.  Financial capability, referred more frequently to financial literacy, means possessing the financial skills and knowledge required to confidently make smart decisions on a variety of financial matters.  One can fairly assume that CPAs possess these necessary skills, but what about your non-CPA colleagues and co-workers?  This month, the findings of several annual surveys are released which highlight the current state of American’s finances, and based on some of this year’s results the financial capability of the average American worker is unfortunately low. 

According to the American Savings Education Council’s 2012 Retirement Confidence Survey of Americans 25 and over, only 19% of workers feel that they are doing a good job at preparing financially for retirement and just two-thirds (66%) report that they are saving for retirement.  (This does not include Social Security or employer-provided money.) 

Furthermore, according to a survey conducted for the AICPA by Harris Interactive, just 2% of the 1,005 U.S. adults who participated in the telephone survey said the one action they most likely would take in a financial pinch would be to stop contributing to their retirement accounts.  Twenty-seven percent identified their main concerns as long-range goals, such as paying for education and saving for retirement.

Workplace programs can have a tremendous impact on helping employees improve both their short-term and long-term financial standing.  According to Barbara Kontje of American Express, a 2011 Workplace Leader in Financial Educations Award winner, their ongoing workplace financial literacy program has resulted in a 7% increase in 401(K) participation and those deferring 5% or more increased from 72% to 80%.  Their tactics include a dedicated website, on-site fairs, one-on-one counseling sessions and employee challenges. 

Similar success is possible for smaller employers with limited or no budget.  Consider bringing in your plan sponsors to offer education sessions.  Volunteer to offer a lunch and learn one month and recruit your fellow CPAs to present the following month.  Ask you employees what they want to learn to ensure you’re providing the information needed.  Whether you begin in Financial Literacy or later this year, the AICPA offers free tools and resources to help you start a workplace program. Visit the AICPA Financial Literacy Volunteer Resource Center, 360 Degrees of Financial Literacy and Workplace Leaders in Financial Education websites for more information. 

Do you or does your employer offer workplace financial education?  Why do you feel it’s important for employers to work to improve the financial understanding of its employees?  

Melora C. Heavey, Senior Manager - Communications, American Institute of CPAs. Melora manages the CPA profession’s volunteer effort, 360 Degrees of Financial Literacy, and the award-winning public service campaign, Feed the Pig.  She serves as the staff liaison to the National CPA Financial Literacy Commission, the leadership body and primary spokespeople for 360 Degrees of Financial Literacy.

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