Help Employees Recession-Proof Their Retirement
If news reports are to be believed, a recession is looming. And whether workers are early in their careers or near retirement age, growing and protecting their savings is critical to a secure future.
With employees stating they are more likely to save for retirement when they have access to a 401(k) or similar plan by their employer, one of the best ways companies can ease worries over the impact of an economic downturn is by offering retirement benefits. In fact, eighty-eight percent of employees surveyed said that a 401(k) or similar plan is important.
To structure a plan with optimal outcomes, consider these five factors:
- Communicate: Let employees know about the retirement plan benefits you offer, the way they work, and how they can help participants save for a secure retirement. While plan documents can be complex, try to simplify the information and provide additional guidance in meetings, with online tools, or through other resources.
- Auto-Enroll: Remove any hurdles by auto-enrolling employees when they are eligible. A recent survey by The Pew Charitable Trusts found that enrolling new employees automatically increases plan participation dramatically, with participation rates that exceed 90 percent compared with rates in the 50 percent range for plans in which workers must opt in. You can further drive savings with an auto escalation feature.
- Showcase Shortfalls: Many employees put off saving for retirement because they’re focused more on bills they need to pay today than on their far-off future. But it’s critical to understand what they should be saving now to reach their retirement goals. One good way to communicate this information is to share recommended guidelines for savings based on their age and salary.
- Offer Matching: To incentivize participation, offer an employer match contribution or adapt your current match formula to drive immediate returns on employee investments. The feature can also boost employee loyalty by showing that you’re concerned about their financial well-being and, depending on your vesting schedule, encouraging employees to stay on until they are fully vested in the match.
- Provide Financial Wellness: More than half of workers would like more information and advice from their employers on how to reach their retirement goals. Whether you offer an investment advice service or one-on-one consultation with a financial professional, these options can help employees get on the right path to retirement.