How to help your employees prepare for the 3 biggest threats to their income
Each and every one of our employees are different and no matter how well prepared for life they are, there will always be obstacles along the way. These obstacles can often impact their income, causing a significant strain on their day to day lives.
But how often do employees reflect on what they would do if their income was cut and they couldn’t afford to pay for everyday essentials, such as rent, mortgage, food, utility bills and even day to day activities? This is not a welcome thought, but unfortunately a necessary one.
There are many situations in life which could affect someone’s earnings but here are what we believe to be the biggest 3:
Death – It is certainly not a cheerful subject, but it is sadly a part of life and therefore needs to be addressed. On top of the grief their families would suffer if they were to pass away, there also comes a huge amount of financial pressure, as they lose one income in the household. In addition, employees might leave bills and debt behind, increasing the financial strain on loved ones.
Sickness – Sometimes employees can face sickness in their life which results in them having to take time out of work. This ultimately means their income is reduced or sometimes stopped altogether. This poses many challenges in terms of paying their mortgage or rent as well as general bills and food. And, depending on the health issue, unexpected costs to cover treatment or house modifications might be needed, increasing the financial stress.
Retirement – This one might not sound like a threat at first but, without careful planning, it might become one. Most employees will go through life knowing that at some point they will have the choice to retire. Although some people know and plan to retire at a certain age, life’s circumstances may force them to retire earlier or later than planned. And when that day comes, employees will no longer have the income they are used to, meaning that their life will need to be adjusted to suit.
So, how can you help your employees be better prepared and minimise the impact to their income?
Although no one knows what the future holds, there are some things employees can do and put in place to help them manage unexpected events. As an employer, you might offer some sort of protection for employees as part of their employee benefits packages. It’s vital to continuously remind employees of their benefits and the reasons as to why they might need them. Highlighting the 3 biggest threats to life can sometimes help employees understand why they should prepare now. Even if you do not offer any cover to employees or it comes with an additional cost, you should still be encouraging employees to plan for and protect their future.
For many people, organising protection is one of those things they’ll “do tomorrow” or “worry about next year”. But as we really cannot predict what the future holds, this could leave your employees and their families in a very vulnerable position should the worse happen. Some employees might believe that it is too late to take a policy out. But, in more recent years, a few providers have started offering plans for those in their 50s and 60s.
For those younger employees, financial protection might not be something on their minds. However, it’s well known that taking out protection earlier on, can sometimes be cheaper. Continuous communication to employees, no matter what age or life stage they are in, will make sure they can find the right protection for them and their families.
Some employees will meticulously plan life, whilst others will just go with the flow, but both will not be able to avoid life’s challenges. Offering your employees financial education will provide them with the tools and resources they will need to plan for their future. Being as best prepared as they can for the 3 threats to their income can reduce stress, provide peace of mind and increase financial security for both them and their families.
This article is for information purposes only and does not constitute advice or a personalised recommendation.
The Financial Conduct Authority does not regulate taxation and trust advice.
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