Four Ways to Improve Your Financial Wellness in 2021

A look back at 2020 reinforces the importance of planning and saving in 2021.
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By Charlie Nelson

We’re finally in a new year, 2021 — and with that we can all hope to move past arguably one of the most impactful and memorable years of our lifetimes. But in that year, many of us learned a lot. Yes, 2020 brought its challenges, but with those challenges came an opportunity for change and growth for many individuals, particularly when it comes to the importance of health and wealth.

It’s no secret that the COVID-19 pandemic has put a spotlight on the shifting priorities of Americans. According to the results of a new survey from Voya, a significant amount (73%) of Americans agree that material goods matter less given their experiences with the COVID-19 pandemic. Even more, a majority (75%) of Americans have become more focused on their mental health and emotional well-being. This shift in priorities has also brought to light a resource for support that many working Americans may not have appreciated as much pre-COVID: their employer.

Maintaining a healthy balance when it comes to both financial and mental well-being is becoming increasingly important. This includes things like retirement savings, emergency fund support, and access to voluntary benefits such as protection for unexpected critical illnesses, accidents or hospital stays — particularly in light of the global health crisis. And individuals are seeing employers as a valuable resource here. The same survey found more than half (60%) of working individuals have grown a new appreciation for their employer given their experiences with COVID-19. To be sure, households will need to think about multiple sources of support for their health and wealth needs, but their employer is already a key provider of many of these. So when it comes to seeking employer support, where can you look?

Emergency Savings are Critical

If 2020 taught us one thing, it’s that the importance of emergency savings has never been greater. With COVID-19 causing unprecedented economic disruption, recent industry data shows that up to 46 million Americans have depleted their emergency savings. Whether realizing the need for having such funds became apparent due to the financial toll of the past few months or simply as an “eye opener” for many who realized the need for emergency funds is not farfetched, consider talking to your employer about what opportunities they might offer to help.

With more than six in 10 individuals agreeing that they are now better prepared for a future emergency (66%) and are saving more money to cover possible unexpected expenses (62%), it’s clear that more employers will look for more opportunities to help their workforce in this area.

Keep Focused on Retirement

Yes, these are extremely challenging times for both employees and employers, but keeping a focus on the “end game” and your future savings can help as you look to weather the storm. The good news is, despite a year of financial uncertainty for many, still more than half of individuals (55%) are more focused on planning for retirement. If it’s available to you, remember to look to your employer for additional opportunities to save, such as taking advantage of a matching contribution through your workplace retirement plan. You might also look to see if automatic escalation is available to help get back on track with your saving.

This past year as a result of the pandemic, many individuals were also given the flexibility to withdraw savings through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which eliminated early withdrawal penalties and increased the loan amounts for workers dealing with a COVID-related hardship. But it’s important to remember that those who leveraged this additional flexibility will also need a plan to replenish those savings over the years to come. Perhaps also those who took a loan or hardship and did not use the entire distribution should now consider what opportunities under the CARES Act remain to be able redeposit the unused amount back into a defined contribution plan.

Keep that Benefits Enrollment Statement Handy

It wasn’t that long ago that we all signed up for our 2021 benefits. This includes health care, dental, vision, and many other common benefits that employers offer. If you are like many, you took the time last fall to consider making some changes, and that’s great. In fact, recent Voya research also indicates that more than half of working and benefits-eligible individuals (56%) spent more time reviewing their voluntary benefits options/coverage than they did during their previous year enrollment period. Either way, don’t forget what you signed up for and the value those offerings can provide in 2021. Health savings accounts and voluntary benefits like accident insurance or hospital indemnity insurance and other employer support offerings can fill important gaps in health care insurance. What’s more, this can help absorb costly medical costs or other living expenses you might encounter this year — all the while, keeping your focus on saving for retirement intact.

Don’t Forget Work-Life Balance

With many of us continuing to work from home, and having the flexibility to do so, the good news is more individuals are also “making the most of it.” More than half (60%) of working Americans say they have more work-life balance than prior to COVID-19; while just over half (59%) have noted becoming healthier through diet or exercise.

The reality is, though, without commute times and lunch breaks in the cafeteria, working from home can become all-consuming. It’s important to remember to take the time you need to allow for exercise, screen breaks or just stretching your legs — and your employer should support this. We cannot forget that most of us were asked to uproot our everyday lives and become more than just employees, such as taking on the role of both full-time teacher and employee, and that’s just during the 9-to-5. Others might be struggling with what the pandemic has caused when it comes to decreased activities for socialization or the inability to see their loved ones. So while financial needs such as retirement and emergency savings will become increasingly important, you might also consider seeking out offerings such as employee assistance programs.

While 2020 and the impacts of COVID-19 have taught us many things, perhaps most important is that our shifting priorities are emphasizing the importance of workplace holistic wellness offerings. So if you’re employed, be mindful of what your employer might offer to provide support. While it may not have been a consideration before, there is no better time like the present. After all, hindsight truly is 2020.

About the Author: Charlie Nelson

Charlie Nelson is chief executive officer of Retirement and Employee Benefits for Voya Financial, Inc. (NYSE: VOYA), which helps Americans plan, invest and protect their savings — to get ready to retire better. He oversees Tax-Exempt Markets, Corporate Markets and Retail Wealth Management —comprising the company’s workplace and individual retirement businesses, including 401(k), 403(b) and 457 plans — as well as Voya’s Employee Benefits business.

All 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 1,004 adults aged 18+ in the U.S. (including 534 who are currently working). Research was conducted Nov. 19-20, 2020, and Dec. 17-18, 2020 ((1,005 adults aged 18+, including 294 who are currently working and benefits-eligible). 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).