WINDSOR, Connecticut, October 20, 2021– (COMMERCIAL THREAD) – Voya Financial, Inc. (NYSE: VOYA), Releases New White Paper of its Voya Behavioral Finance Institute for Innovation: “Financial wellness meets behavioral economics: helping participants see the big picture and act on itIn the paper, written by Shlomo Benartzi, professor emeritus, UCLA Anderson School of Management, and the institute’s senior academic advisor, Benartzi outlines the opportunities and considerations for employers to help their workers allocate their savings to maximize health and the wealth. In the 21st century, American workers must prioritize health and wealth when making financial decisions. As a result, they need to allocate their savings efficiently across different financial products and accounts. Given the complexity of these alternatives, making the right choice requires workers to see the big picture.
When it comes to saving for the future, many people turn to their workplace for help, but the reality is that saving is often not enough. Today, workers are also responsible for spreading their funds across several different financial products and accounts, such as retirement accounts, emergency savings, health care, and even education. Along with these competing financial priorities, nearly three-quarters (73%) of Americans feel their money isn’t going as far as it used to.1 according to new data from Voya.
âThe financial lives of American workers are becoming increasingly complicated, making it clear that saving for retirement is no longer enough when it comes to planning for the future. To effectively determine where to allocate their salary, individuals must now ask themselves several questions. : Should they fund their 401 (k) account or their emergency savings account? Should they choose a high deductible health plan and put their savings in a health savings account? Should he pay off his student debt or start saving in an education 529 account? And the list goes on, âsaid Charlie Nelson, vice president and chief growth officer at Voya Financial. âAs a result, the workplace continues to gain importance in helping Americans meet their health and wealth needs. For employers, this represents a new and unique opportunity to help workers maximize their goals. long-term financial well-being. “
In the new white paper, Benartzi examines a behavioral trend known as “tight framing” – an inability to see the “big picture”. When it comes to the distribution of savings, tight framing can lead people to fund accounts that may not be as financially beneficial for their long-term needs and financial well-being. For example, not saving for emergencies can expose people to financial shocks and costly debt, which can cause them to seek funds from their retirement savings.
âBecause many people are likely to be tightly framed in making financial decisions, it is important to offer workers clear advice on how to allocate their dollars to various financial categories, from financial accounts to savings to health insurance plans, âBenartzi added. âFinancial well-being is like physical well-being. If you want to be truly healthy, you need to develop a holistic plan that includes diet, exercise, and sleep. Financial wellness requires the same holistic commitment. However, thinking holistically about your finances often requires help, which is where employers have a unique opportunity to support their workforce.
Using the tools and knowledge of behavioral economics, Benartzi suggests that there are three main steps employers can take to improve the overall financial well-being of their workforce. Specifically, he suggests employers create a platform that:
Show the big picture. When offering savings options to employees, it is important to provide them with the flexibility to save for emergencies at the same time as retirement. Likewise, when offering health insurance options to employees, consider combining the cost of premiums and deductibles to better understand the total potential cost.
Allows you to easily act on the big picture. Once people are able to see the big picture, it is just as important to be able to act on it. For example, when it comes to emergency savings, consider using the same autopilot tools that help workers save for retirement, including an escalator feature. For high-deductible health insurance plans, this could mean helping individuals redirect their savings from lower premiums to a health savings account or supplemental insurance plan.
Customize the big picture. When it comes to savings, no one is alike, which is why personalized support is becoming increasingly important. The best health insurance option, for example, will often depend on the intended medical use; while the optimal allocation of savings will depend on how much they have saved and their retirement income goal.
âAs household finances become more and more complex, narrow framing becomes an increasingly expensive mental trend,â Benartzi added. “By minimizing the impact of tight framing, we can really help employees better allocate their meager dollars. The goal is to make the best choice the easier choice.”
âWhen it comes to planning for the future, we believe it is important to help make the right choice, the easy choice for all individuals,â added Nelson. âThe ultimate goal is to develop a data-driven financial wellness benefit that helps people better allocate their meager dollars, and employers who truly focus on the big picture of their participants will help deliver better. results for all individuals. “
Celebrating five years of behavioral science in action
Since its launch in 2016, research and collective reflections conducted through Voya’s Behavioral Finance Institute for Innovation have improved the digital experiences of over 99% of Voya’s pension plans and nearly 5,500,000 plan members. eligible retirement.2 That includes influencing over a million eligible retirement participants with their retirement savings plans – and with over 375,000 people taking action.3 Improvements in participants’ savings rates also ranged from significant increases of 8% and, in some cases, a significant doubling of the savings rate.4 By fusing behavioral science with the speed and scale of the digital world, the institute continues to create large-scale solutions designed to help improve individual retirement outcomes. For more information and to view the results of the current white paper or previous studies, visit Voya.com/behavioralfinance.
As an industry leader focused on delivering healthcare, wealth and investment solutions in and through the workplace, Voya Financial is committed to fulfilling its mission of making possible a secure financial future for all. Americans – one person, one family, one institution at a time.
1. Voya financial survey conducted from August 27 to 30, 2021 on the online omnibus platform Ipsos eNation among 1,003 adults, including 475 working Americans and 291 eligible for benefits, aged 18 and over in the United States
2. Includes Voya Enroll, Pweb Screen Changes, and Custom Video Distribution.
3. Take actions defined as being influenced by a behaviorally altered digital intervention that increases participation or savings rate (e.g. smarter defaults, saved by design, rate increase, save more and restart savings email campaigns and personalized videos). This includes those that accept nonzero defaults.
4. Depending on the location of the digital experience, the actions were taken by a participant. Based on Beshears, Mason and Benartzi. “How to choose a default value” (coming in 2021); Bhargava, Conell-Price, Mason and Benartzi. “Save (d) by Design” (Working document 2018).
About Voya FinancialÂ®
Voya Financial, Inc. (NYSE: VOYA), provides healthcare, wealth management and investment solutions that empower its approximately 14.8 million residential, professional and institutional clients to achieve their wellness goals financial with confidence. With the vision to be America’s Retirement CompanyÂ®, Voya’s products, solutions and digital capabilities help create a better financial future for all. Voya is a Fortune 500 company with 2020 revenue of $ 7.6 billion and total assets under management and administration of $ 721 billion as of June 30, 2021. Certified âGreat Place to Workâ by the Great Place to WorkÂ® Institute, Voya is also committed to conducting business in a way that is socially, environmentally, economically and ethically responsible. Voya has been recognized as one of the World’s Most Ethical CompaniesÂ® by the Ethisphere Institute; as a financial services company ranked # 1 in Barron’s 100 Most Sustainable Companies for three consecutive years; as a member of the Bloomberg Gender-Equality Index; and as âBest Workplace for Inclusion of People with Disabilitiesâ on the Disability Equality Index. For more information visit voya.com. Follow Voya Financial on Facebook, LinkedIn and Twitter @Trip.
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