According to a new survey from Bank of America Merrill Lynch, more than 60 percent of employees said they are contributing less to their 401(k) plans due to using health costs.
“Financial stress caused by rising health-care costs is affecting other goals people have, like retirement,” said Kevin Crain, head of workplace financial solutions at Bank of America Merrill Lynch. The survey, conducted in September and October of 1,242 workers who contribute to a 401(k) plan, also found that rising medical costs tend to hurt women more than men.
According to Crain, employers can do a few things to help out including:
- Automatically enroll employees in retirement plans and gradually increase their contributions
- Provide financial wellness programs to help employees make ends meet
- Offer health savings accounts of HSAs which allow tax-free withdrawals to pay for qualified health expenses.
Yes, healthcare costs are on the rise and the world of retirement plans is always changing. That’s why smart employers and financial advisors trust the expertise and dedication of Benefit Equity to help retire their worries about their retirement plan design and administration.
Rising health costs may cause people to contribute less to 401(k) plans.