Goldman Sachs' 5 must-have benefits in 2023

5 must-have financial wellness benefits for 2023, according to Goldman Sachs

December 16, 2022 3:25 PM

In the face of record inflation and talks of a recession, employers and employees have had money on their minds — and workers will expect solutions in the new year.

Prices increased by nearly 14% since the start of 2022. The U.S. Joint Economic Committee reports that even if prices suddenly stopped inflating, this year's inflation will already cost the average household approximately $9,000 over the next 12 months. Many employees are carrying their financial burdens into 2023, and if employers want to remain competitive, they can't turn a blind eye, says Greg Wilson, head of workplace solutions at Goldman Sachs Ayco Personal Financial Management, an employer-provided financial planning service.

"The competitive benefits package is a different space today than it was a year ago," he says. "There's a direct correlation between your financial well-being and your overall well-being. Employers recognize that they need to provide additional resources."

With insight from over 500 clients, Wilson has witnessed more and more organizations prioritize flexible, financial-focused benefits in the last year. He expects new must-have benefits to emerge in 2023 as employees grapple with a higher cost of living, student loan debt and anxieties around retirement savings.

Here are five financial well-being benefits that employers should consider including in 2023.

Lifestyle spending accounts

A lifestyle spending account, or LSA, allows employers to build an account that funds employees' everyday expenses, be it gym memberships, mental health support or child and pet care. While LSAs do not currently come with tax benefits, Wilson notes that their flexibility is a big draw. For example, if an employer contributes $2,000 to each employee's LSA, that $2,000 is not limited to healthcare spend or wellness-related purchases like other employer-provided accounts. Workers choose what's important to them, with few parameters. For instance, an employer may place a maximum on certain services, like a $500 limit on annual gym membership fees.

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"As companies are struggling to think through their role as employers, we see more employers have their employees make their own decisions," says Wilson. "With lifestyle spending accounts, they can put some parameters around it, but ultimately paint with a broad stroke and give more optionality to their employees."

Student loan assistance

While by no means a new benefit, student loan support will remain vital to employees' financial wellness in 2023. Wilson advises employers to find a student loan benefit that works for them, whether it's matching monthly student loan payments, helping workers refinance their loans or allowing employees to cash in their PTO and put that money toward student loan payments.

Notably, some employers may still be waiting to see if President Biden's student loan forgiveness plan is reinstated, but employers would be wise to have a benefit in place sooner than later — Wilson has already seen many clients move on this benefit.

"Regardless of what happens in Washington, companies recognize the stress employees are under given the massive student loan debt they have," he says. "Companies are looking for resources to help employees gain back some control over their debt."

Emergency saving accounts

An ESA helps employees save for financial emergencies by automatically deducting an amount from each paycheck and depositing it into a separate account created by their employer. Additionally, employers can opt to match employees' contributions, encouraging workers to grow their "rainy day fund" even if they can only add a little each month, says Wilson.

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Like the LSA, ESAs also allow employees to have more agency in how they use this benefit. Some employers may even make the funds accessible through a provided debit card, so employees can use it when they need it without question.

"It sounds so simple, but giving employees a separate account that's not tied to their checking really allows people to save more for unexpected expenses," says Wilson. "This is something we are seeing a lot more interest in."

Revamped 401(k)s

While 401(k) plans are a baseline benefit, Wilson has noticed more employers going above and beyond to make sure employees are enrolled and able to contribute. He estimates that over 80% of the companies he has connected with provide auto-enrollment for new hires. New employees can opt out, but the auto-enrollment makes it easier for workers to start their accounts without administrative stress. He also has seen auto-escalation become more widely adopted, which means that given the employee's approval, their 401(k) contribution will automatically increase each year by a certain percentage.

Education

Even if employees have their pick of financial wellness benefits, Wilson stresses the need for financial education. Whether employers offer help through financial health coaches, digital financial management platforms or both, employees will need guidance on what benefits they should take advantage of. This not only means employees will get the best bang for their buck, but that these benefits will not go to waste.

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"It's part of the job to educate employees, so they have an effective understanding of what they're utilizing," says Wilson. "Employees should be able to value and appreciate the benefits they have when life happens."