FINANCIAL SOLUTIONS FOR HEALTHCARE ORGANIZATIONS …

The current state of retirement plans for healthcare organizations

FINANCIAL SOLUTIONS FOR HEALTHCARE ORGANIZATIONS FALL 2021

Understanding the pandemic’s impact on the workforce, financial wellness, and retirement income-focused plan design

FINANCIAL SOLUTIONS FOR HEALTHCARE ORGANIZATIONS

The current state of retirement plans for healthcare organizations 3

Impact of the pandemic on healthcare organizational challenges .....................................................................4

Challenges accelerated by the pandemic ............................................4

New concerns resulting from the pandemic ........................................5

Plan purpose ...........................................................................................7

Plan design for lifetime income ...........................................................8

Automatic features ................................................................................9

Auto Enroll/Auto Increase ......................................................................9

Default investments ...............................................................................9

Multidimensional workforce ...............................................................10

Generational differences ......................................................................11

Roles/clinician strategies ....................................................................12

Physicians ...........................................................................................12

Nurses ................................................................................................14

Race-related impacts on financial wellness ......................................14

Employee engagement ........................................................................15

Inclusivity ................................................................................................15

Robust education ..................................................................................16

Readiness tools ....................................................................................17

Investment advice, not just guidance .................................................18

Financial wellness ................................................................................19

Expanding the focus of financial wellness .........................................20

Key takeaways ......................................................................................21

About this report ..................................................................................22



Recruiting and retaining healthcare staff, especially nurses, remains a challenge—with turnover rates for staff RNs increasing by 2.8% to reach a current average of nearly 19%.1 Staffing costs are higher as well, as hospitals compete for talent and pay inflated rates for travel nurses due to COVID-based demands, decreasing staffing numbers at smaller, less competitive hospitals.

Providing a retirement plan that engages a multidimensional workforce is an even greater priority given the growing emphasis on inclusion, diversity and equity (ID&E). Healthcare organizations must step up their efforts to understand where disparities in financial well-being are occurring among different socioeconomic groups, ages, genders, roles and races, so they can help all employees have an equal opportunity to improve their retirement readiness.

Enabling adequate lifetime income replacement is the single biggest influence on overall plan design, reflecting a keen interest from both plan sponsors and participants in investment solutions that can provide this type of guarantee.

Declining use of defined benefit (DB) plans and the shift to defined contribution (DC) plans have been foundational to an overall cost reduction strategy. However, this approach requires employees to be more financially savvy and have access to a reliable income stream in retirement. This shift is happening at the same time that DC plan sponsors are encouraged to provide options for lifetime income solutions following the passage of the SECURE Act and related retirement reform.

31% of plan sponsors/healthcare organizations say they are facing growing structural complexity related to their retirement plan.2 With the desire to meet employees where they are, it’s no longer feasible to take a one-size-fits-all approach. Also, from a fiduciary standpoint, plan sponsors are putting more formal processes around how

they evaluate and select additional offerings instead of simply adopting new tools or capabilities because they are available or recommended.

Plan sponsors are also creating a more disciplined and rigorous process around documentation and participant education. As a result, legal counsel at healthcare organizations is becoming more involved in plan-related seminars and workshops—adding another layer of oversight. Even plan changes made during COVID-19 to allow easier access to retirement funds added administrative complexity.

Merger and acquisition activity among healthcare organizations is still going strong and hasn’t slowed down despite the COVID-19 pandemic. In this environment, trying to manage risks during retirement plan consolidation is a major concern as organizations seek to minimize the potential disruption caused by merging recordkeeping platforms and harmonizing plans.

A phased approach helps reduce integration risks, including keeping plan provisions intact for affiliates as they merge into a larger organization. The transition to a consolidated plan can produce anxiety and concern, typically at the smaller company involved in the acquisition. Yet, this change is also an opportunity to add new capabilities that encourage plan participation, such as auto-enrollment.

Impact of the pandemic on healthcare organizational challenges

Preparing the workforce for successful retirement amid an ongoing pandemic adds to the concerns healthcare organizations faced before COVID-19. These challenges have been accelerated by the pandemic.

of healthcare plan sponsors believe their provider should help mitigate risk during a merger/acquisition.

58%

say they should serve in an advisory capacity during this activity.342%



The economic consequences of COVID-19 have led many healthcare organizations to find ways to reduce costs while working judiciously to protect retirement plan benefits. In many cases, employer contributions previously suspended were restored retroactively to make participants whole. Furthermore, plan sponsors have demonstrated heightened interest in automatic features to increase participation and savings rates while fostering prudent investing via a custom plan default.

The economic effects of the COVID-19 pandemic also have impacted how confident healthcare employees feel about their financial condition and ability to save for retirement. In fact, 46% of healthcare employees say their financial condition has worsened.4

23% of retirement savers have decreased the amount they are saving, with 7% stopping saving completely. On the other hand, 14% have increased the amount they are saving.5

Almost 30% of retirement savers have changed the investment allocation of their retirement savings—19% decreased the share in equities, 9% increased it.6

29% have become less confident that they are saving an adequate amount for retirement. This figure is 47% among those who decreased their saving.7

26% have become less confident that they are investing their retirement savings appropriately. This figure is 46% among those who decreased investments in equities.8

Healthcare employees’ finances have been adversely affected since the pandemic.

The pandemic added additional concerns to an already challenged environment.



Despite this retraction in confidence and savings among a significant number of healthcare employees, there is a growing sense of financial optimism as vaccination rates increase, though time will tell. In fact, 42% of healthcare workers expect their financial well-being to improve.9

Part of that cautious optimism may be attributed to the efforts of the 74% of plan sponsors that have been actively working to help employees improve their retirement savings amid the pandemic.10 Yet, while this focus is critical, it’s vital to understand that employees are equally interested in other areas of financial wellness, such as debt management/counseling and personal budgeting.

The nursing role was particularly impacted due to the need to provide greater coverage in critical areas during the height of the pandemic. For example, rehab nurses have had to stand in as ICU nurses for extended periods, creating stress and difficulty keeping up. In many cases,

this situation has contributed to higher nurse turnover rates noted earlier. At the same time, 50% of healthcare organizations say that changing roles have exacerbated retention concerns.11 As healthcare organizations eventually reimagine their operations in a post-COVID world, other roles may be subject to change to meet existing gaps or new demands versus simply filling open positions.

The need to safeguard both employee and patient health during COVID-19 has resulted in the desire for better plan engagement methods for new hires according to 42% of plan sponsors surveyed.12 Many healthcare organizations replaced in-person new hire orientations with virtual onboarding. As a result, there’s been growing demand for features and services to boost ongoing plan engagement, with implementation and usage of automatic features increasing to accommodate these requirements.

of healthcare employees are less confident that they will have enough money in retirement.13

of healthcare workers expect their financial well-being to improve.13

But as the economy recovers from COVID aftershocks …

38% 42%

The report that follows provides healthcare plan sponsors with greater insight into the current state of retirement plans. It addresses both sponsor and participant activity; the financial challenges and needs of a more diverse workforce; and the tools, features, and guidance that may help support improved participant engagement and success in achieving desired financial outcomes.

Likewise, by understanding the varying needs and preferences of multidimensional employees, sponsors can help their respective healthcare organizations design plans that attract and retain highly skilled healthcare professionals and critical support staff.



Despite the extremely challenging environment and changes brought about by the pandemic, helping participants build retirement income and financial well-being remain an important focus for plan sponsors.

Plan purpose

of healthcare organizations say providing lifetime income is the main purpose of their retirement program.

72%of healthcare employers say a retirement program should allow for both wealth accumulation and secure income through retirement.16

88%

According to a recent Spectrem Group Not-for-Profit Healthcare Sector Report, 72% of organizations say the priority is to provide a source of lifetime income through their retirement plan while 28% say wealth accumulation is the main goal.14

Still, a growing number of healthcare employers view retirement plans as both a vehicle for accumulation and a way to provide their employees with secure income through retirement.

At the same time, 68% of larger healthcare plan sponsors (those with more than 1,000 employees) also cite their retirement plan’s ability to attract and retain employees as a primary benefit.15



This focus has a broad range of implications on plan components, such as the investment menu and core plan success metrics, and makes sense given the passage of the SECURE Act in 2019 and its call to provide lifetime income options in retirement plans. In response, 55% of 403(b) plan sponsors say they have increased their interest in offering in-plan guaranteed lifetime income options.18 And, 51% of all participants say they would be very to extremely interested in this investment solution.19

Among the smaller share of plan sponsors who don’t believe participants would be interested in a lifetime income option, most blame that on a lack of understanding of the product—something that improved education could remedy.20

Furthermore, an important success metric for the plan should be the participant income replacement rate versus average account balance and other similar measures.

Plan design for lifetime income

As healthcare organizations work to address the dual goals of wealth accumulation and lifetime income for employees through their retirement plans, plan sponsors are most likely to see “enabling adequate income replacement” as the single biggest influence on overall plan design.

Although cost and competitiveness are factors in plan design, enabling participants to have adequate income replacement in retirement is the most influential, followed by meeting participants’ needs.

Of the plan sponsors who offer in-plan guaranteed lifetime income options:

Figure 1: Biggest influence on plan design17

Enabling participants to have adequate income replacement in retirement

Meeting your participants’ needs

To be competitive with industry peers

The cost to the company

34%

27%

22%

17%

consider them to be highly valuable for employees.21

86%



Importantly, automatic features support the inclusion goals of an organization, especially annual re-enrollment. Adoption of these features has increased since the pandemic. Here’s a look at how widespread the use of these capabilities is today and how employees have responded.

Auto Enroll/Auto Increase• 33% of healthcare organizations have implemented

automatic enrollment in their 403(b) plans, with those that offer auto enroll experiencing a mean participation rate of 70% compared to 43% for those without.22

• Among healthcare organizations with more than 1,000 employees, 42% have implemented automatic enrollment. An additional 58% said they plan to implement auto enroll in the next year.23

• At 67%, 403(b) plan sponsors are more likely than 401(k) sponsors (36%) to offer auto increase of employee contributions.24

In addition, of the healthcare organizations that offer automatic enrollment, 58% of these extended it to current employees through an annual reenrollment opportunity.25 When the goal is to encourage greater plan participation, organizations would do well to allow automatic enrollment for new and existing employees alike.

Default investmentsThe high cost of operating a healthcare organization under COVID-19 has no doubt impacted decisions to shift from defined benefit to defined contribution plans. And as more healthcare organizations embrace this approach, many have turned to a qualified default investment alternative (QDIA) as a way to help employees get started and become appropriately diversified.

Today, approximately one-third of healthcare plan sponsors offer target date funds as preferred qualified default investment alternatives (QDIAs).27 Target date funds simplify investing for plan participants but they are solely focused on accumulation and age, not retirement outcomes.

This type of approach would enable healthcare organizations to offer “personal pensions” without weighing down their balance sheet; that is, a defined contribution retirement plan with a custom default investment that includes an income component and can provide income guaranteed for life, much like a defined benefit pension plan.

Automatic features

Automatic features, such as auto enroll, auto increase and default investments are being recognized as powerful tools to improve employees’ financial security by making it simple to participate in the plan, increase contributions on a regular basis, and invest in a prudent, diversified option.

of plan sponsors believe that target date funds help participants meet their income needs in retirement.28 And that is not necessarily the case.

of sponsors would be highly interested in a new type of target date fund that as the target date gets closer would start allocating assets into an investment that provides plan participants with the option to receive guaranteed lifetime income anytime—typically at retirement.29

77%

of healthcare plan sponsors offer target date funds as preferred QDIAs.26

30%

78%



Showing each employee a clear path to retirement is a priority of a healthcare organization’s retirement plan.

To achieve this, organizations need to build a deep understanding of their plan participants—including the way age, role, and social and economic factors influence retirement readiness. Gaining this knowledge is essential in a multidimensional workforce environment, where employees’ ability to save and understand how to prepare for retirement can vary tremendously.

But before looking at the financial situations and retirement needs of different types of plan participants, it’s important to acknowledge the huge impact that COVID-19 has had on the financial condition of the entire workforce.

Multidimensional workforce

say their overall financial condition has worsened due to COVID-19

expect their financial conditions to worsen over the next year

feel less confident that they are saving enough for retirement

are less confident that they are investing their retirement savings appropriately

changed their investment allocations—19% decreased their equity exposure, while only 9% increased it

46%

27%

29%

26%

~30%

Figure 2: Financial impacts of COVID-1930

Additionally, Black and Latinx communities were disproportionally impacted by the pandemic, creating an increased emphasis within these groups on using extra money for immediate financial needs, rather than increasing retirement savings.31

These insights reflect the added financial pressures that many plan participants may be experiencing beyond those related to their race, role, life stage or other determinants. As organizations respond, they must take all these factors into consideration as they devise strategies to promote financial well-being and confidence among a diverse workforce.

Nearly half of healthcare employees say their financial condition has worsened as a result of COVID-19, with many less confident that they are saving enough and investing appropriately for retirement.



Generational differencesMany members of the different demographic cohorts in the workforce are actively saving for retirement. Yet, as they face unique life-stage challenges and changing circumstances over time, it’s easy for retirement plan goals to get off track without the right level of financial support and guidance.

Generation Z are the newest entrants to the healthcare workforce, including nurses and other healthcare support staff and professionals fresh out of college. Their salary expectations and desire for greater flexibility are having an impact on healthcare organizations’ recruiting practices. To attract and retain in-demand employees, healthcare organizations should rethink their benefits package in terms of what this cohort wants and needs for both job satisfaction and financial wellness. At the same time, they should connect and communicate with potential candidates using preferred digital channels.

As healthcare organizations proceed with these efforts, those that do not prioritize inclusion may struggle even more to retain talent and younger workers. The potential for this outcome increases with the influx of Generation Z into the workforce. Born between 1997 and 2015, ages 6-24 today, Generation Z members will more likely be LGBTQ+ or gender fluid, 2+ races and Spanish speaking.

Millennials, like Generation Z, often enter the workforce saddled with student loan debt, making it difficult to consider planning and saving for retirement at the outset of their careers. In particular, millennial nurses and non-clinical staff may not be able to count on Social Security as a source of income replacement in retirement, increasing doubts within this group about achieving financial security.

Regardless of role, millennials need their employers to offer tools that help them create a budget, see how they can realistically pay down debt and build a plan that will result in enough savings to live comfortably through retirement.

Generation X have competing financial priorities: supporting their children and families, as well as elderly relatives. For instance, nurses—the majority of whom are women—are often their families’ main caregivers and put a premium on flexible hours, both of which affect finances and long-term retirement readiness.

This demographic group tends to rely on employer-sponsored plans, but the splintered nature of their day-to-day financial responsibilities could cause them to fall behind on saving for retirement. These employees need plans that provide guidance on balancing these responsibilities while investing aggressively enough to ensure savings aren’t outpaced by cost-of-living increases during retirement. As noted previously, some employees shifted their allocations out of equities during the pandemic, creating an opportunity for an advice session to re-assess their asset allocation.

Baby boomers see retirement on the horizon. But they must manage this final sprint while also recovering from the twin impacts of the Great Recession and pandemic. While baby boomers feel a strong urge to leave something behind for their loved ones, this objective is tempered by the realization that they may need to keep working just to support themselves. Financial circumstances vary significantly within this group, as well—from the cafeteria worker who hasn’t saved enough to the specialized surgeon who requires sophisticated estate planning. They want their employers’ plans to include advice that can help them assess when the time is right to retire.

Percent saving for retirement:

Millennials52% Baby Boomers3268%62% Generation X



Roles/clinician strategiesRoles vary substantially in healthcare organizations, with physicians, nurses and non-clinical staff all representing different levels of income, retirement readiness, debt and savings. That said, many employees saw their financial well-being worsen during the early days of the pandemic, according to a survey taken online from May 21 to June 11, 2020.33

While the pandemic has taken a personal toll on healthcare employees, the related impact and financial strain have varied among them.

Figure 3: Financial well-being worsened across the workforce.34

All employees

Registered nurses

Physicians/surgeons

Other medical professionals

Office and administrative

Non-medical professionals

46% 46% 8%

46% 47% 7%

51% 39% 10%

45% 47% 8%

48% 44% 8%

43% 49% 8%

Let’s look at how physicians and nurses have fared as front-line clinicians.

PhysiciansFor most physicians, the medical profession is a calling, first requiring an intense focus on their medical studies and later on the delivery of quality care or building a practice. With these priorities, physicians’ financial concerns typically get little attention.

In good economic times, there’s also less urgency for physicians to improve their financial knowledge, planning and strategies. But the COVID-19 outbreak is a clear reminder that the financial health of both an organization and its employees is subject to unexpected and potentially significant change. Depending on the type of care physicians provide, they have experienced different care challenges during this period, along with a greater or lesser financial impact during the pandemic:35

Worsened ImprovedNo change

Doctors are not good at managing money. As a group, we’re not the most financially savvy. There’s no time to focus on it, so just give me the advice. 36



And regardless of whether physicians worked in emergency or critical care, essential care, or non-essential care, the pandemic caused many to reconsider their prevailing ideas about retirement. For example, physicians in mid- and late-career were more likely to think about early retirement given the conditions under which they are working. This is contrary to what physicians expressed pre-pandemic, when many said they intended to work well into their 70s or later.38

Yet, retiring at an earlier date will require careful financial planning since physicians entering the workforce carry significant debt, and savings don’t begin to outpace debt until mid-career at best. As physicians become more tenured, they tend to develop complex financial needs, which require specialized advice, such as the payoff of medical school debt, tax strategies and estate planning.

At the same time, younger physicians now suspect their retirement will be delayed, with residents just wanting to get through their practicums “fraught with

risk” and become doctors. Paying down debt and building emergency savings are a priority so that they can eventually focus on long-term financial strategies.

A primer on financial literacy during residency would offer a good starting point, with residents then benefitting from specialized services, such as assistance with student loan forgiveness programs, cash flow planning and budgeting.

In addition to services relevant to specific life stages, all physicians say they would benefit from financial literacy “refreshers” during their career, along with check-ins during life’s major transitions.40

Figure 4: The extent of COVID-19 financial impacts based on a physician’s area of care37

Emergency or Critical Care Essential Care Non-Essential Care

Describe overwhelming work situations or anticipation of the next onslaught of infected patients.

Continue to provide business-as-usual services using new protocols to protect their patients, staff and themselves from the virus.

Fully understand the “non-essential” designation but fear some necessary care is marginalized.

Harbor the greatest fear of contracting COVID-19 or spreading the virus to staff and loved ones, and witness much suffering and death.

Do not perceive themselves as front-line staff given the degree of risk assumed by emergency and critical care providers.

Speak of the great range of specialties that fall under this umbrella and the impact on patients who are unable to receive this form of care.

“It is like entering a war zone. Sometimes I just want to turn around and go home [while driving to the hospital].”

“Mothers are still having babies...babies still need the NICU...and not according to any schedule dictated by COVID.”

“Most ophthalmology is not life threatening...it is really about quality of life. But try telling that to someone with macular degeneration.”

Least impacted financially. Somewhat impacted financially. Very impacted financially.

May need to disassociate to perform. Experiencing a mix of relief and some guilt.

Feeling sidelined.

Physicians who engage in non-essential care experienced the greatest financial hit during the COVID-19 pandemic and many will need extra help to get their retirement plan back on track.

Physicians are often 10 years behind their non-physician peers in terms of savings.39

I now do an annual check-up with my financial advisor. TIAA made it happen which is good because I wouldn’t have done it. You know, the annual check-up meetings make it very personal. 41



NursesEconomic uncertainty and financial well-being are always a concern. Like many, nurses have experienced unemployment in their households due to the pandemic and their confidence was impacted by market volatility and other factors. And even though finances were not a priority topic among those surveyed in TIAA’s Nurse Profession Insight Series COVID-19 Update, common financial concerns and challenges remain:

• Young nurses struggle with cash flow and find it challenging to manage tuition payments and other monthly bills with their beginning income—let alone think about contributing to a retirement plan.

• Nurses with families are hyper-focused on current and upcoming expenses (such as household maintenance and tuition) that interfere with planning and saving for the future.

• Mid- to later-career nurses are often distracted by the need to obtain an advanced degree. Older nurses are particularly impacted by downsizing or closing of healthcare facilities if they do not meet current education requirements, such as a BSN or MSN versus an RN license. In addition, many of these more tenured nurses have family and caretaker responsibilities requiring attention and potential financial assistance.

Nursing shortages have always been an issue, but this problem has been greatly exacerbated by the pandemic. With a third of the nation’s nurses born during the baby boomer years, there is an extended wave of retiring nurses.42 In fact, after career advancement and relocation, retirement was the third most common reason why nurses resigned, moving up two spots from 2019.

This situation, along with the 1,200+ U.S. nurses who have died from the virus,44 contributed to higher turnover rates, which reached 18.7% for staff RNs in 2020.45

Routine and more targeted communications delivered via multiple channels can help nurses take a more active role in their finances as they prepare for retirement. Part of this approach should include reinforcing important financial information that nurses received early on when they likely had less time to absorb it. Meanwhile, personalized, relevant advice can help nurses on the path to financial wellness from the start of their careers.

Race-related impacts on financial wellnessRace-related disparities are equally important to understand to support financial wellness among all employees. Note: It’s important to consider historical/systemic obstacles and their impact even today on financial resiliency. For example, a recent financial survey of Black and Latinx Americans revealed a nearly 20% and 15% lag behind White Americans, respectively. Black and Latinx Americans also reported lower financial resiliency.47

It’s also important to view financial wellness through the lens of generational and gender differences. Not surprisingly, the youngest members of every racial group surveyed needed the most education and support. This is a similar situation for women—who often leave the workforce due to child or other family care issues.48 By doing so, organizations can apply combined insights to ultimately spur engagement in retirement plans.

of nursing students will graduate owing student loan debt.43

Established nurses may struggle with debt, too, given the growing requirement to obtain advanced degrees.

Acknowledging this burden and providing education and debt solutions, including forgiveness programs, is necessary for an effective attraction and retention strategy.

70%

I remember someone talking about the retirement plan during my nursing orientation. So much [was] covered that I was trying to pay attention to…but it kind of got lost amid a lot of information. 46



InclusivityPromoting an inclusive culture and achieving higher employee engagement and performance go hand in hand. When organizations invite and enable people with different backgrounds, perspectives, experiences and ways of thinking to work effectively together, the ability to meet organizational goals increases.

In fact, businesses with diverse and engaged employees are 6 times more likely to be innovative and agile.49 And, companies in the top quartile for gender diversity on executive teams were 21% more likely to outperform on profitability.50 Yet only 48% of companies consider themselves adequate at focusing on global cultural diversity,51 and of the 81% of organizations that say they

are focused on improving diversity and inclusion, less than half have publicly documented commitments to racial or ethnic equality.52

Without strategies that support a more inclusive workforce, healthcare organizations may struggle to attract and retain top talent and a younger workforce. Establishing and operationalizing diversity programs from strategy through execution can help create a culture of inclusion. This approach leverages best practices to help healthcare organizations apply policies and deploy programs that reflect conscious inclusion in recruiting, talent development and ongoing management and workforce planning among different employee groups.

Employee engagement

With one of the most diverse workforces, healthcare organizations recognize the need to support a more inclusive environment, along with engagement tools and programs that reflect the unique financial circumstances and concerns of different employee groups. A combination of robust education offerings, delivery channels, readiness tools and investment advice and guidance will enable healthcare organizations to take a multi-pronged approach toward boosting engagement.

Figure 7: Inclusivity brings measurable benefits to healthcare organizations.53

Team collaboration up by Decision-making quality up by

When employees felt included...

When healthcare organizations actively work to engage all members of a diverse workforce, profitability, teamwork and employee innovation can increase.

20%29%



Robust educationAs healthcare organizations employ an increasingly diverse workforce, there are certain aspects of financial wellness on which most employees agree. For starters, 70% of employees feel they need their employer’s help to make sure they are healthy and financially secure, and 62% say it is the employer’s responsibility to do so.54

By helping employees gain greater financial knowledge and understanding, healthcare organizations can fill the gap created by a lack of basic financial education. For example, only one-third of healthcare workers have received financial education in school, the workplace or from another organization.55 Even physicians, who have spent years in medical school, typically enter the real world with little preparation for managing living expenses and finances.

For these reasons, employees are very interested in almost all types of financial education or resources that might be offered in the workplace, with nearly three-quarters saying they’d like more information about their plan or retirement savings in general.56

When healthcare organizations commit to promoting greater financial confidence and retirement preparedness among their employees, robust and targeted education programs are a way to level the playing field. Plan sponsors agree, with 50% saying high-quality education services are very important when looking for a plan provider.57

Among the various educational services that employees find highly valuable, 72% of employees would be interested in programs that help them better understand how to obtain guaranteed income in retirement.58 In addition, both employees and plan sponsors alike value guidance on how much to save for retirement, pre-retirement planning programs and personal finances.

Figure 8: Education services that appeal to participants59

Employees highly value programs that can help them boost their retirement readiness, including those focused on obtaining guaranteed income in retirement.

Programs offering ways to obtain guaranteed income in retirement

Guidance on how much to save each year for retirement

A pre-retirement planning program

Advice on retirement investment asset allocation

Educational resources that provide guidance on personal finances

One-on-one financial wellness coaching

A budgeting tool to better analyze spending/saving behaviors

A health savings account (HSA)

Debt counseling

A student debt repayment program

72%

68%

67%

63%

62%

60%

60%

56%

49%

44%



Readiness toolsIt’s difficult for employees to feel confident about having enough income in retirement when the unexpected may be right around the corner. No one was prepared for a global pandemic—or the ensuing economic consequences as governments worked worldwide to contain it. While the likelihood of a similar outbreak in the future may be low, it’s far more common for employees to experience unanticipated health concerns and other financial hits that sideline their retirement savings.

Gauging how much money is enough to save for retirement can be confusing and fraught with uncertainty. Employees may not know where to begin, overlook critical considerations or both. No wonder that

53% of plan sponsors say it’s very important and 36% say it’s somewhat important to look for a plan provider that offers retirement readiness tools and services.60 For example, tools that help employees project the income they’ll need when they retire have proven to be particularly useful.

• Of employees who increased their plan contributions in 2020, nearly half said they were motivated to do so by a retirement income calculator or projection.61

• 67% of employees received a personalized retirement income projection in the past year—and 95% said it was helpful.62 This focus on providing visibility into retirement income is in alignment with the SECURE Act and its provisions to encourage greater participation in retirement plans.

Nearly 40% of healthcare employees have become less confident that they will have enough money to live comfortably throughout retirement—making tools that can help them assess and plan for income needs more critical.63



Investment advice, not just guidanceAlong with readiness tools, investment advice and guidance add to the options that healthcare organizations can offer to bolster employees’ financial knowledge and engagement in their retirement plan. A recent Spectrem Group survey indicates that a considerable number of healthcare organizations are including these options in their plans:

• 50% of healthcare organizations say their plan provides investment guidance to participants and 58% say they provide investment advice. 11% offer neither.64

• 53% of healthcare plan sponsors say it’s very important and 36% say it’s somewhat important when looking for a plan provider that they provide advice, not just guidance.65

How organizations deliver investment advice and investment guidance can impact the level of employee engagement. Depending on the generational/demographic cohort, certain employee groups often have different preferences and expectations regarding how they receive this information, so providing multiple options helps healthcare organizations cast the widest net.

Healthcare organizations clearly favor the delivery of investment advice and investment guidance face-to-face with a provider representative (67% and 72%, respectively) and via group meetings (52% and 56%).66 While employers look forward to being back in person for 1:1s and group meetings following an extended period of remote working, it’s not clear when they will be comfortable with having financial consultants onsite. It will be interesting to see how the utilization of virtual or hybrid experiences emerge versus in-person and website options over the long term.

Figure 9: How investment advice and investment guidance are delivered67

A face-to-face approach is currently the preferred way to deliver investment advice or guidance. As both providers and participants become more comfortable with using the website for this purpose, it will be interesting to see if the face-to-face approach begins to level off in comparison.

Face to face

67%

52%

33%38%

Group meetings

Telephone Online

72%

56%44% 44%

50%

Face to face Group meetings

Telephone OnlineWritten materials

Investment Advice Investment Guidance



Financial wellness

As noted earlier, almost one-half of healthcare employees report that their financial well-being has worsened since the onset of COVID-19 (reference Figure 3 under Roles/clinician strategies).

And among the 75% of employees who had emergency savings prior to COVID-19, one-third of them have used at least some of it.68 This situation underscores the need for healthcare organizations to include a financial wellness component with their retirement plan/benefits package. Fortunately, many organizations do, including 79% of those with 1,000+ employees.69

At the same time, 69% of healthcare employers said they increased their focus on improving the financial wellness of employees in 2020.70 Many have been relying on multiple components to help employees achieve that goal, as shown in Figure 10.

Figure 10: Components of financial wellness71

A holistic approach to financial wellness, beyond retirement, comprises many components. Of note, most employers are focusing their efforts on providing employees with programs and services related to financial assistance, long-term planning, education and coaching.

Education and coaching 42%

Financial assistance 50%

Long-term planning 44%

A focus on employee needs 31%

Budgeting and spending 39%

Emergency funds 31%

Financial counseling 31%

Insurance and benefits 31%

Investment strategies 25%



Expanding the focus of financial wellnessIn years past, retirement was often equated with a single nest egg. But as the previous figure shows, today the focus is shifting to a broader definition of financial wellness. Under this approach, financial wellness enables individuals to achieve and sustain financial security and independence, with a focus on paying off debt, managing daily finances, savings, long-term planning and investing, and protecting against key financial risks.

To progress in this direction, healthcare organizations are contracting with outside wellness providers to help them develop a more comprehensive, holistic financial wellness program. In conjunction with this effort, organizations are looking to plan providers to then incorporate their financial wellness strategies into the healthcare organization’s broader retirement and financial wellness program.

In the end, this more holistic view of financial wellness effectively aligns with healthcare organizations’ strategic initiatives to rebuild and improve employees’ retirement readiness post-pandemic. It also strengthens inclusion, diversity and equity initiatives, so that all employees are better prepared to meet their financial challenges.

Employers prioritize multiple areas of financial wellness

Retirement savings and debt management/counseling are tied for first in terms of areas employers could use the most support to better help employees improve their financial wellness.72



Please visit TIAA.org/healthcareplansponsors for additional insights, information and guidance.

Email TIAA’s Healthcare Team at [email protected] to discuss these findings in more detail.

The impact of pandemic-related pressures continues to ripple across healthcare organizations. However, there are opportunities as plan sponsors continue to navigate the pandemic and beyond.

Key takeaways

ChallengesThe stress of intense caregiving and role changes have been taking a toll, leading to greater turnover in some instances and an overall lack of employee focus on issues related to financial wellness. Meanwhile, market volatility earlier on contributed to a decrease in financial confidence.

Through it all, healthcare organizations have also been addressing the complex challenges that have existed for the past decade but in an accelerated state, such as mergers and acquisitions, attracting and retaining top talent, providing an opportunity for a “personal pension” through a defined contribution plan, and sustaining a successful business model with healthy, consistent revenues.

OpportunitiesTo succeed in this environment, our research found that a focus on the workforce is paramount, and an effective retirement plan is one of the best ways to reflect it. The most desirable and appealing retirement plans are those that enable wealth accumulation and provide employees with sufficient income in retirement, with in-plan investment options that offer guaranteed lifetime income.

Helping employees achieve secure income through retirement also requires a tailored and multi-pronged engagement approach—one that promotes inclusivity to account for the widely diverse socioeconomic circumstances, ages, genders and roles of the people working in healthcare. This approach includes developing a broader view of financial wellness, so that employees’ financial needs can be met more holistically. A convergence of these factors should position a plan sponsor to effectively recruit, retain and retire its employees with confidence.

TIAA was founded to help educators retire with dignity. Today, 100+ years later, we’ve evolved into a Fortune 100 organization, managing $62B in retirement assets from healthcare institutions alone. With a specialized practice in healthcare, TIAA helps clients contain costs, reduce complexities, and provide their employees with a clear and confident path to retirement. Imagine the possibilities.

http://TIAA.org/healthcareplansponsors

mailto:TIAAHealthcare%40TIAA.org?subject=



About this report

TIAA regularly conducts research through the TIAA Institute, producing a variety of objective surveys to help leaders in non-profit sectors like healthcare make informed decisions.

The Spectrem Group report generated research findings within the healthcare sector, which included approximately 100 hospitals and multi-hospital healthcare systems.

In addition to the TIAA Institute and the Spectrem Group research, this report also provides insights from multiple recent surveys ranging mostly from Q2 2020 to Q3 2021 as noted throughout the document.

1 2021 NSI National Health Care Retention & RN Staffing Report2 Spectrem Group Not-for-Profit Healthcare Sector Report

(December 2020)3 Spectrem Group Not-for-Profit Healthcare Sector Report

December 20204 Healthcare Sector Financial Wellness Survey,

TIAA Institute (2020)5 Healthcare Sector Financial Wellness Survey,





TIAA Institute (2020)10 TIAA Retirement Insights Survey (2021)11 Spectrem Group Not-for-Profit Healthcare Sector Report


(December 2020)13 Healthcare Sector Financial Wellness Survey,

TIAA Institute (2020)14 Spectrem Group Not-for-Profit Healthcare Sector Report


(December 2020)16 TIAA Retirement Insights Survey (2021)17 TIAA Retirement Insights Survey (2021)18 TIAA Retirement Insights Survey (2021)19 TIAA Retirement Insights Survey (2021)20 TIAA Retirement Insights Survey (2021)21 TIAA Retirement Insights Survey (2021)22 Spectrem Group Not-for-Profit Healthcare Sector Report


(December 2020)24 TIAA Retirement Insights Survey (2021)

25 Spectrem Group Not-for-Profit Healthcare Sector Report (December 2020)



28 TIAA Retirement Insights Survey (2021)29 TIAA Retirement Insights Survey (2021)30 Healthcare Sector Financial Wellness Survey,

TIAA Institute (2020)31 TIAA Institute-GFLEC Personal Finance Index (2021)32 TIAA Institute-GFLEC Personal Finance Index (2021)33 Healthcare Sector Financial Wellness Survey,


TIAA Institute (2020)35 TIAA Profession Insight Series: Physicians (2020)36 TIAA Profession Insight Series: Physicians (2020)37 TIAA Profession Insight Series: Physicians (2020)38 TIAA Profession Insight Series: Physicians (2020)39 TIAA Profession Insight Series: Physicians (2020)40 TIAA Profession Insight Series: Physicians (2020)41 TIAA Profession Insight Series: Physicians (2020)42 “How Should We Prepare For The Wave Of Retiring Baby Boomer

Nurses?,” Health Affairs Blog, May 3, 2017. DOI: 10.1377/hblog20170503.059894

43 (National Student Nurses’ Assoc). Physicians enter with approx. $200,000 (nerdwallet.com).

44 https://www.nytimes.com/2021/08/21/health/covid-nursing-shortage-delta.html

45 2021 NSI National Health Care Retention & RN Staffing Report46 TIAA Profession Insight Series: Nurses (2020)47 The 2021 TIAA Institute-GFLEC Personal Finance Index48 The 2021 TIAA Institute-GFLEC Personal Finance Index49 ‘The diversity and inclusion revolution: Eight powerful truths’

(2018) by Deloitte50 Closing the gap: Leadership perspectives on promoting women

in financial services’ (2018) by McKinsey & Company.

51 ‘Diversity and Inclusion: The reality gap’ (2017) by Deloitte52 Let’s Get Real About Equality, Mercer. For the 2020 global

report, Mercer surveyed more than 1,150 companies in 54 countries.

53 ‘The diversity and inclusion revolution: Eight powerful truths’ (2018) by Deloitte

54 2020 EBRI/Greenwald Research Workplace Wellness Survey (www.ebri.org/docs/default-source/wbs/wws-2020/2020-workplace-wellness-short-report.pdf?sfvrsn=d60b3a2f_2)

55 Healthcare Sector Financial Wellness Survey, TIAA Institute (2020)

56 TIAA Retirement Insights Survey (2021)57 Spectrem Group Not-for-Profit Healthcare Sector Report

(December 2020)58 TIAA Retirement Insights Survey (2021)59 TIAA Retirement Insights Survey (2021)60 Spectrem Group Not-for-Profit Healthcare Sector Report

(December 2020)61 TIAA Retirement Insights Survey (2021)62 TIAA Retirement Insights Survey (2021)63 Healthcare Sector Financial Wellness Survey, TIAA Institute

(2020)64 Spectrem Group Not-for-Profit Healthcare Sector Report




(December 2020)68 Healthcare Sector Financial Wellness Survey,

TIAA Institute (2020)69 Spectrem Group Not-for-Profit Healthcare Sector Report,

December 202070 TIAA Retirement Insights Survey (2021)71 Spectrem Group Not-for-Profit Healthcare Sector Report,

December 202072 TIAA Retirement Insights Survey (2021)

Any guarantees are backed by the claims-paying ability of the issuing company.

This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances

Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.

Investment products may be subject to market and other risk factors. See the applicable product literature, or visit TIAA.org for details.

TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations.

©2021 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017

1750818

FINANCIAL SOLUTIONS FOR HEALTHCARE ORGANIZATIONS …

Documents

Transcript of FINANCIAL SOLUTIONS FOR HEALTHCARE ORGANIZATIONS …