The Rising Priority of Employee Well-Being: How Small Businesses Are Redefining Workplace Benefits in 2025
28min read The Lincoln Financial 2025 Small Business Study reveals a seismic shift in how U.S. small businesses approach employee benefits. With talent retention and cost management at the forefront, these businesses are rethinking traditional benefit models to address evolving workforce needs. The findings highlight a clear demand for financial security, health coverage, and innovative solutions—creating both challenges and opportunities for investors in the benefits and technology sectors.
The Dual Imperative: Retention and Cost Control
Small business owners are acutely aware that benefits directly impact their ability to attract and retain talent. A staggering 55% prioritize expanding benefits for financial security and retirement savings, while 46% aim to improve medical expense coverage. Yet, gaps in knowledge persist: only 45% are confident in their understanding of financial security offerings, and 63% lack deep familiarity with medical coverage options. This disconnect creates a ripe environment for companies offering consultative services or streamlined solutions to fill these knowledge voids.
The Underserved Market of Voluntary Benefits
While small businesses focus on “must-have” benefits like dental or vision coverage, they often overlook voluntary benefits (e.g., accident insurance, critical illness plans). Despite 75% of owners viewing medical expense coverage as critical, 56% do not offer accident insurance, and 65% lack critical illness or hospital indemnity plans. This represents a significant untapped market for insurers and benefit providers. Companies like Lincoln Financial, which emphasize bundled voluntary benefits, could capture a growing share of this demand.
Investors tracking LFG’s stock may note its resilience in a volatile market, reflecting institutional demand for its tailored small-business solutions.
Cost Efficiency Through Bundling and Technology
The study underscores the underutilization of benefits bundling, where multiple offerings are packaged under one carrier. Only 20% of small businesses use bundling, despite 75% citing cost savings as a top motivator. Meanwhile, InsurTech solutions—such as automated enrollment platforms—could reduce administrative burdens, a critical pain point for owners spending hours on manual processes. For investors, this points to opportunities in tech-enabled benefits platforms and bundling-focused insurers.
Financial Wellness: The Next Frontier
A mere 36% of businesses currently offer financial wellness programs, though 34% are considering it. Desired programs like debt management (cited by 53%) and investment education (44%) suggest a hunger for tools that address employees’ broader financial stability. Companies partnering with fintech firms to deliver these services could position themselves as indispensable allies to small businesses.
Market Growth and Investment Implications
The data paints a clear picture: small businesses are ready to invest in benefits but lack the expertise to navigate complex choices. This creates a $34 billion U.S. voluntary benefits market, projected to grow at 6.2% CAGR through 2030 (as cited by Grand View Research). Meanwhile, Lincoln Financial’s Workplace Solutions division, which focuses on small-business needs, saw 12% revenue growth in Q3 2024—outpacing its overall 5% annual growth rate.
Conclusion: A Win-Win for Employers and Investors
Small businesses are at a crossroads: they must balance retention, cost control, and innovation in benefits. The Lincoln study’s findings suggest that companies offering consultative partnerships, bundled voluntary benefits, and InsurTech tools will dominate this space. For investors, sectors like health insurance, fintech, and HR tech are poised to benefit.
The numbers are compelling: 75% of small businesses cite cost savings as a bundling motivator, and 53% of owners want debt management programs—indicating a strong demand for scalable solutions. As Lincoln Financial and competitors capitalize on these trends, the small-business benefits market is set to become a cornerstone of both workforce stability and financial innovation.
For investors, the takeaway is clear: supporting the tools that empower small businesses to prioritize employee well-being is not just ethical—it’s a strategic bet on a future where talent retention drives economic success.
