Closing the Financial Inclusion Gap: How Employers Can Help

There is growing bipartisan support for the concept of financial inclusion—ensuring all people in the U.S. have access to basic wealth-building tools like retirement accounts. In October 2024, the U.S. Treasury Department declared household financial security a national priority needing coordinated public and private action.

A financial security policy expert stated that the recent election made clear personal finances are top-of-mind for people because their household budgets drive their interests in what leaders should focus on.

While some financial inclusion metrics show positive trends, others reveal stagnation or decline, especially among low-income and minority groups.

According to the expert, this indicates the current system is not working for everyone. The expert added that employers are often well-positioned to help people when they face financial decisions requiring guidance.

Offering Information When Employees Need It

Experts advise that one vital role of human resources is providing good financial information when employees need it, like during open enrollment periods. Complex paperwork has often deterred people from signing up for retirement plans or insurance in the past. Simplifying forms and using auto-enrollment increases participation.

Around one-third of companies still lack retirement plans. Experts urge them to consider more affordable savings options with automatic enrollment. Employers already offering retirement accounts could provide emergency savings plans, which help retain wealth by preventing retirement drawdowns during crises.

Measuring the Success of Financial Inclusion Efforts

The Treasury Department's recommendation urges organizations to prioritize financial security as a goal. By establishing metrics, the effectiveness of initiatives, such as improving access to savings options, can be tracked and improvements initiated.

For instance, boosting retirement plan participation requires collaboration between employers, accountants, investment managers, and government agencies overseeing pertinent regulations and tax incentives.

Key Financial Inclusion Metrics & Trends

Experts point to various statistics that demonstrate where financial inclusion efforts are working or falling short. Key metrics and trends include:

• Prime credit scores: Over 53% of U.S. adults
• Retirement savings adequacy: Only 49% of working-age households
• Access to bank accounts: 96% of households
• Short-term savings: Just 45% have at least six weeks' emergency funds
• Long-term savings effects: In the pandemic, those with emergency savings were significantly less likely to tap retirement funds.

Bipartisan Support for Financial Inclusion Goals

Experts believe financial inclusion retains bipartisan support despite expected federal policy shifts. Whether people can access essential financial tools like retirement accounts, emergency savings, and bank accounts is something all lead ers should support, regardless of ideology.

How Employers Can Promote Financial Security

Companies can advance financial security for staff through several concrete measures:

• Offer Information : When relevant, provide useful financial details during open enrolment periods and other key moments.
• Simplify Account Sign-ups and Re-enrollment Auto-enroll employees in retirement savings and insurance plans. Auto-re-enroll them when eligible for higher contributions.
• Consider Cost-Effective Retirement Savings Accounts One-third lack retirement plans. More affordable options with automatic enrollment can help.
• Add Emergency Savings Accounts Help workers preserve retirement wealth by providing vehicles to build short-term savings.
• Measure Financial Success Track participation, contribution, and opt-out rates to gauge engagement and where to improve.

The Role of Emergency Savings in Financial Inclusion

Emergency cash buffers are growing in popularity with employees, as research shows how they benefit in building long-term wealth. According to experts, they help households better survive financial shocks now while maintaining assets earmarked for later retirement. Emergency savings are essential for weathering current crises and achieving future retirement goals.

In this issue:

This Just In ... Wage Growth Starts to Lose Steam as Labor Market Cools

Time to Rethink Existing Benefit Strategies

Does Your Wellness Program Need an Inclusion Check-Up?

Closing the Financial Inclusion Gap: How Employers Can Help

Don’t Leave Pet Parents in the Doghouse

The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher's permission. All rights reserved. ©2025 Smarts Publishing https://smartspublishing.com/ Tel. 877-762-7877.