By: Doug Rooker, Vice President, Sales
A recent Wall Street Journal article by Jilian Mincer, Loans From 401(k)s Are on the Rise As Investors Tap Their Inner Bank, caught my attention.
Some highlights of the article include:
- Millions of Americans are increasingly turning to what was once a lender of last resort—their 401(k) plans.
- In 2010, about one in seven workers borrowed from a 401(k) plan according to new data from human resources consulting group AON Hewitt.
- Companies that run the plans report double-digit increases in borrowing from 2009: up 14% in Vanguard Group Inc.-run plans; up 11% in plans run by T. Rowe Price Group Inc.
- Today, almost 30% of 401(k) savers have a loan outstanding, the highest in recent history.
So why did this article stand out to me? As I meet with our clients and brokers, attend industry events like Benefits Selling and SHRM, and read industry articles like this one, I hear a common thread – many employers and employees are tasked with doing more with less.
Employers are tasked with offering better and more comprehensive benefits while keeping costs down. At work, employees are tasked with being engaged and productive even when they are worried about finances in their home life. And as numerous studies show, financial stress contributes to employee productivity loss.
This is why I think Purchasing Power is such a great program. We are a voluntary benefit that is no-cost to the employer. At the same time, we help employees reduce financial stress (and discontinue borrowing against their 401k). Our program is a safe and simple option to make important purchases in a disciplined way. We help give employees a solid foothold in enhancing their financial wellness now and in the future.