Paid time off or pet-friendly offices? Generational job perk preferences vary

Gone are the days when a simple pay raise would retain quality talent. “Generous paid time off ” and mental health support rank as the highest value employee benefits desired — cited by 40% or more workers across all generations.

Employees’ needs are constantly evolving, and many expect a holistic range of benefits beyond traditional health insurance offerings in the post-pandemic workplace.

Yet what exactly should those extra perks be? There is considerable variation in what workers want. Among the many factors that influence their preferences is age.

Employee benefit preferences vary by age

For the first time, workplace benefits provider Unum has found employees across four generations — Boomers, Gen X, Millennials and Gen Z — have different preferences regarding their favorite non-insurance benefit.

The most sought-after benefit among older staff — Boomers and Gen X — was generous paid time off, at 49% and 42%, respectively. Yet for younger workers — Millennials and Gen Z — mental health resources/ support was the most popular, at 39% and 42% for each generational group.

Unum surveyed 1,000 fulltime working Americans in December, giving participants a choice of 15 benefit categories (excluding health insurance). The list included a plethora of potential perks, ranging from ID theft prevention to sabbatical leave and from gym facilities to petfriendly offices.

While each generation had differing top choices, ample paid time off was the most popular benefit across generations (39%), followed by flexible/remote work options (32%) and paid family leave (31%).

The results highlight the need for companies to diversify and optimize their benefit offerings to retain talents across age groups.

“A multi-generational workforce is a huge benefit for companies,” explains Liz Ahmed, executive vice president of People and Communications at Unum. “With the diversity of background, experiences, and thought employees bring, employers need to make sure there’s something in their benefits package for everyone’s different stage of life.”

Employees who identify their preferred benefits and actively pursue them in their contracts naturally tend to be more satisfied with their overall compensation. Workers may also consult with financial planners for assistance in optimizing their benefits package.

Financial experts respond to the survey findings

“By some calculations, employees leave up to one million dollars in unused benefits on the table … so reviewing non-insurance benefits is a huge way I help clients,” says Kelley Long, CFP and founder of the Find Your Financial Bliss coaching program.

Long, who helped workers get the most out of their benefits in her prior role at Financial Finesse, says financial wellness benefits are particularly valuable.

“These are probably the most misunderstood and therefore underutilized benefit that many people have available.”

Jon Mccardle, President of Summit Financial Group of Indiana, says he consults clients on a number of extra benefits during open enrollment meetings.

“The options that are outside of their HSA plans, which are often inquired about, include how much death benefit to take beyond their current base coverage, should they sign up for the legal coverage, should they take advantage of the Longterm Care insurance, and what type of deductible plan should they select,” he says.

David Barfield, CFP, who mainly consults high-earning tech workers, claims most of his clients typically want to optimize to lower their tax burden.

Preparing for a financial emergency

Emergency savings are a key part of the new provisions included in the Secure Act 2.0, which became law on Dec. 29. There is a growing impetus to solve Americans’ lack of preparedness for financial calamities and get more workers to use an emergency fund and save for a rainy day. One Bankrate survey from early last year showed less than half of Americans could cover a $1,000 emergency expense.

According to the recently passed law, beginning in 2024, retirement plans may include “emergency savings accounts.” These would allow non-highly compensated employees to make Roth after-tax contributions to the savings account. The saver could then draw upon the account penalty-free and without needing to justify the withdrawal.

Yet financial advisors are split when it comes to emergency savings — the most broadly popular benefit in Unum’s survey. Canvassing opinions from seven financial advisors showed little consensus on whether emergency funds should come under the benefits rubric.

“We believe added options to benefits that will help employees’ future selves in ways that might not seem obvious now is good for everyone,” points out Mccardle.

“The average employee does have a hard time with saving extra money and especially when costs are on the rise, so having this come out of their checks before a direct deposit will come to be quite helpful, especially when it is 100% accessible.”

“I don’t believe it is the responsibility of the employer to provide this as a benefit,” says Erik Baskin, Founder of Baskin Financial Planning.

“Companies that may start offering an emergency fund match instead of a 401(k) match may be doing harm to the retirement readiness of their employees. Employer-provided benefits are great, but the more that employees can do on their own and rely less on their employer, the more financially resilient they will become in the long run.”