How to help employees save for retirement without sacrificing healthcare

Retirement savings and healthcare costs are two of the biggest financial concerns for employees today. With rising medical expenses and the uncertainty of Social Security, many workers struggle to balance saving for their future while covering present healthcare needs. As an employer, you have the opportunity to support your employees in achieving both financial security and health coverage—without forcing them to choose one over the other.

1. Offer a benefits package with employer contributions

One of the most effective ways to help employees save for retirement while managing healthcare expenses is by offering competitive benefits. Employer-sponsored retirement plans, such as a 401(k) with matching contributions, provide employees with an incentive to save. Additionally, contributing to employees’ health savings accounts (HSAs) or flexible spending accounts (FSAs) can ease the burden of medical costs, freeing up more money for retirement savings.

2. The power of HSAs

Health savings accounts (HSAs) are a game-changer for employees who want to save for both healthcare and retirement. HSAs offer triple tax advantages: generally, contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. Unlike FSAs, HSA funds roll over from year to year and can be used in retirement for medical expenses, effectively serving as a secondary retirement savings account. Educating employees on the long-term benefits of HSAs can encourage them to contribute more.

3. Provide financial wellness education

Many employees don’t take full advantage of employer-sponsored benefits simply because they don’t understand them. Hosting workshops, offering one-on-one financial coaching, or providing digital tools that explain the interplay between retirement savings and healthcare costs can empower employees to make informed financial decisions. Consider personalized benefits technology that helps employees assess how much to contribute to their 401(k) versus their HSA based on their unique financial situation.

4. Implement auto-enrollment and auto-escalation

Automatic enrollment in 401(k) plans and auto-escalation features can significantly increase employee participation and savings rates. Employees are more likely to stick with a retirement savings plan when they’re enrolled by default, and incremental increases in contributions over time ensure that they save more without feeling an immediate financial pinch. Pairing these features with employer contributions makes it easier for employees to grow their nest eggs without neglecting other financial priorities.

5. Encourage smart benefit utilization

Help employees maximize their current benefits by promoting preventive care, wellness programs, and cost-saving healthcare options. Encouraging employees to use telehealth services, generic prescriptions, and in-network providers can help them reduce out-of-pocket medical expenses, leaving more room in their budget for retirement contributions.

Employers play a crucial role in helping employees balance their healthcare and retirement savings goals. By offering the right mix of benefits, education, and incentives, you can empower your workforce to build financial security for both the short and long term. When employees feel confident about their financial future, they are more engaged, productive, and loyal—creating a win-win for everyone.

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The information in this blog post is for educational purposes only. It is not legal, tax or investment advice. For legal, tax or investment advice, you should consult your own legal counsel, tax and investment advisers. 

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