Financial education programs speak to special challenges raised by cultural factors and longer life expectancy
AT 56, ALICE WATERHOUSE had been confident that retirement beckoned only six years away. She believed she and her husband had adequate 401 (k) plans, mutual funds and savings. But in the course of a single hour, as a cascade of facts swept over her, Waterhouse realized the inevitable: She'll be working until she's 65.
Her epiphany arrived during a program on financial planning for women offered by her employer, Weyerhaeuser Co., at its international headquarters in Federal Way, Washington. "It got me inspired about the importance of saving and planning for retirement," says Waterhouse, an employee service center representative. "All of a sudden my eyes opened up."
Weyerhaeuser-a giant forest product company with annual sales of $19.9 billion and 55,000 employees worldwide-has offered financial literacy programs for more than 20 years. "Special Considerations for Women in Planning for Their Financial Future" was the latest. Sally Hass, benefits education manager, designed and leads it. She has reached as many as 1,000 women annually for the past five years, spreading her message to foresters, office managers, production workers and others in 40 locations in North America.
"Benefits are a key differentiator in becoming an employer of choice, but we know that employees of all levels really don't understand the value of those benefits-not until you couple that with appropriate education," Hass says.
Women especially need financial information for a host of cultural and economic reasons, including today's complexity of choices, she says. "And if you get to them with information they can digest and take action on, that affects their attitude about the company. We spend a lot of money in corporate America on benefits communications. If we would take some of that money and put together an effective program that puts those benefits in the context of people's lives, it just could be we could get our employees to maximize what those benefits could do for them."
Overall financial education helps retain employees and builds loyalty, Hass says. It gives a company a competitive edge and increases productivity. In research reported in 1996, E. Thomas Carman, a textbook author, adviser and professor emeritus at Virginia Tech, found that 15 percent of American workers experienced financial distress to the extent that it diminished their productivity. New research he's done for a report to be issued this month shows that "one-fifth of American adult workers are overly indebted and financially distressed," Garman says.
They lose work time talking to creditors on the phone, taking days off to deal with money problems and making court appearances. Garman has calculated that if employers increased financial education even slightly-one point on a 10-point scale-they would realize a $450 annual return per employee from reductions in absenteeism and time wasted.
They also might reduce the risk of litigation, he says, citing scores of worker lawsuits filed in 2004 alleging employer negligence in teaching them how to invest.
Hass and other experts make the case for human resources' tailoring financial education for women because of special challenges they face. She created Weyerhaeuser's program for them after attending a think tank sponsored by the National Endowment for Financial Education and the AARP. The impetus was learning the number of women heading into retirement barely above the poverty line, she says.
In her hourlong talks, she tells women they need to take financial education more seriously. Her first PowerPoint illustration shows a busload of older women-"little old ladies," she says. Then she asks, "Ever wonder why you don't see a bus full of little old men? It's a lifespan issue." Women outlive men by almost seven years …