New Year, Same Question: Where the Hell Is Our People Budget Going?
The new year is SOOO EXCITING, isn’t it?!
We all get fresh starts, clean calendars, and that very brief moment where everyone pretends this is the year they’ll finally drink more water. (I’m trying!!)
And then reality kicks in, and HR remembers what else Q1 brings.
The word to kick off the new year is budgets.
Suddenly, everyone wants clarity, leadership wants answers, and employees want reassurance.
And HR is standing in the middle like, “Okay, but all of this costs money, and we don’t have an unlimited budget!”
And in case you forgot: the biggest cost in your organization is people.
Not tools. Not AI. Not office space. People!
Yet, we still talk about people costs like it’s just base compensation, as if the rest of it magically funds itself.
You and I both know that it absolutely doesn’t!
I believe that the real money and the real risk lives in three places: healthcare, retirement, and benefits.
These aren’t necessarily separate conversations, either.
They all pull from the same budget, affect the same people, and shape whether those people trust your organization or quietly start planning their exit.
So, if you want fewer surprises this year, you need to understand where your people budget is actually going and why.
That’s exactly what I’ll be discussing so buckle up!
Healthcare Costs Are Rising, and Everyone Is Tired
Let’s start with healthcare, because it’s the one that, quite frankly, makes everyone deeply uncomfortable.
Healthcare costs have been climbing for years, and yet every renewal cycle still feels like a jump scare!
Premiums go up, claims go up, employees are frustrated, leadership is confused, and guess what?
HR is left translating a system no one fully understands! 🙃
The thing is, most employees don’t experience healthcare logically, they experience it emotionally.
What I mean is that they care less about how the plan is structured and more that it’s expensive, confusing (by design), and seemingly unpredictable.
And when anything feels unpredictable, trust erodes.
From an HR perspective, healthcare goes beyond being a benefits issue, because it also impacts absenteeism, burnout, productivity, and retention, but shows up in engagement surveys as “stress” and in exit interviews as “I just need stability.”
What makes this harder is that a lot of healthcare spend is reactive instead of strategic.
Orgs renew plans because that’s what they’ve always done.
They add programs because someone else has them and they invest without really understanding where costs are coming from or whether employees can actually see value in what’s being offered!
Preventative care is cheaper than reactive care, but it requires intention.
It also requires education and designing benefits that fit into real lives, instead of idealized versions of them.
And, if we’re looking at the bigger picture here, social safety nets are shrinking, which basically means employer-sponsored healthcare matters more than ever.
Sooo if your healthcare strategy is anything along the lines of “we’ll deal with it later,” later is going to be quite expensive, my friend!
Healthcare is one of the clearest signals employees use to decide whether their employer is paying attention.
Ignore that at your own risk! ⚠️
If You’re Not Thinking About Retirement, Your Employees Are
Now let’s talk about retirement, aka the benefit that also gets pushed into the deal-with-this-later category.
What I see constantly is leadership assuming employees aren’t thinking about retirement because they’re not asking questions, and employees assuming leadership doesn’t care because no one explains anything.
Everyone is wrong, and everyone is stressed! 🥴
Retirement benefits are about SAFETY.
In a world where layoffs feel constant, inflation won’t calm down, and AI is reshaping work faster than people can keep up, employees are asking one big question:
“Will this company help me build a future, or just survive the present?”
Honestly, offering a 401(k) isn’t enough anymore. Just keeping it real.
People want to know if there’s an employer contribution and if anyone is actually helping them understand how it works.
In my experience, younger employees absolutely do care about retirement, but they don’t want to be shamed for not already knowing everything.
On the other hand, older employees care deeply and are quietly making decisions about whether they can afford to stay.
Retirement benefits intersect with pay equity, internal mobility, and workforce planning more than most organizations admit!
Financial insecurity makes people risk-averse, which ultimately impacts performance, engagement, willingness to grow, and so on.
So when retirement benefits are treated as an afterthought, employees feel it.
But when they’re designed and communicated intentionally, they become a stabilizing force during uncertainty.
Just Because You Offer It Doesn’t Mean It Works
This is the category where I tend to see the most wasted spend. A few examples might include:
- Mental health apps no one opens
- Wellness programs that assume everyone has spare time and energy
- Perks that look impressive but don’t fit real lives
Just because a benefit exists doesn’t mean it’s helping!
Benefits fail when they’re designed in isolation instead of with employees in mind.
They fail when organizations guess instead of ask, or when they prioritize optics over usability.
This is where listening matters, whether that is from surveys, 1:1 feedback, or a combination of efforts.
You might be paying a lot for something NOBODY wants, while underinvesting in what people are actually asking for! Happens more often than you’d think!
Benefits strategy also can’t be separated from what’s happening with AI and the future of work.
Roles are changing, which means skills are shifting, which also means anxiety about relevance is real.
People need support that helps them adapt, not just cope.
Think of benefits as behavior drivers. When they’re designed well, they’ll reduce burnout, support retention, and lower long-term costs.
When they’re designed poorly, they become expensive noise. We have enough of that already!
You Can’t Look at These in Silos Anymore
Healthcare, retirement, and benefits don’t live in separate universes, even though we love pretending they do during budget season.
In real life, these costs collide.
The same employee struggling with medical bills is also deciding whether they can afford to contribute to their 401(k).
The same team experiencing burnout is also quietly questioning whether the benefits you offer actually support their lives in any meaningful way.
And the same leadership team asking HR to cut costs is also asking why retention is slipping and engagement is flat.
See the problem?! 😩
When these areas are managed in silos, HR gets stuck playing our favorite game, whack-a-mole:
- Healthcare spikes ➡️ panic
- Benefits underused ➡️ confusion
- Retirement anxiety ➡️ attrition
But when they’re viewed together, patterns start to show up.
You can actually see where money is being spent reactively instead of intentionally, which means you can forecast risk before it becomes a fullblown crisis!
And, as a bonus, you can finally explain to leadership why certain investments matter, but in business terms.
This is the shift from reactive HR to strategic HR!
The Difference Between Guessing and Knowing
When people costs are your biggest investment, you can’t afford blurry data or half-answers.
This is exactly why orgs turn to Aon for clearer answers, because the guessing game isn’t a game you can afford to play in 2026!
Aon doesn’t treat healthcare, retirement, benefits, talent, and risk like separate fires HR has to put out alone.
Their approach looks at the full picture: how people costs connect to business risk, how benefits decisions impact retention, and how financial uncertainty shows up in real employee behavior.
They sit at the intersection of health, wealth, talent, and risk, which means they help leaders understand:
- Where costs are actually coming from
- Where risks are quietly hiding
- How people strategy connects directly to business outcomes
Volatility is the current norm these days, and as a result, clarity has legitimately become a competitive advantage.
Better data leads to better advice, better advice leads to better decisions, and better decisions make HR less reactive…and a whole lot more respected!!!
That’s good for the entire org, BTW. 😉
