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Four Tips to Boost Your Employees’ Retirement Outlook

As many employees look ahead to retirement, 47% of workers feel somewhat confident that they’ll have enough money saved to retire on time and then live comfortably.¹ However, forward-thinking employers have the ability to help their employees work toward a confident and happy retirement. According to the 2018 Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI), only 17% of American workers feel very confident in their ability to live comfortably in retirement.  Additionally, their 28^th annual survey found that another 47% of workers feel somewhat confident about living comfortably in retirement.[1] That means that over 64% of Americans (or 2/3 of your workforce) feel prepared for their retirement future.

To help boost confidence, here are 4 forward-thinking tips proactive employers can do to help improve your employees’ retirement outlook:

Amp Up Auto Features

The majority of plans, nearly 6 out of 10, have already adopted auto-enrollment.[2] A lot of plans started years ago; but back when many employers implemented automatic enrollment, it was at a 3% default deferral, with no auto-escalation feature.

If you’re auto-enrolling employees at a low rate like 3% and leaving the deferral rate there, consider that many retirement-savings experts believe that Americans need to save 12% to 15% every year. Relying on a 3% deferral, even with a match, may limit your employees’ chances of reaching their goals upon retirement.

We can help you figure out whether a higher initial deferral rate makes sense for your participants and for your organization’s budget constraints on match spending. Auto-escalation has become the new norm: 73.4% of auto-enrolling plans now have this feature.²

Strengthen the Match

Many employees take their cue on how much they should save for retirement from the message you send with the employer match you offer. Match 100% of the first 3% of pay that an employee defers, for example, and employees may think they need to save 3% a year to have enough for retirement. In reality, they most likely will need to save more.

We can work with you to analyze your options for a match formula that can help your employees save more for retirement. For some sponsors, this means implementing a “stretch” match that requires employees to contribute more to get the full employer match: Instead of a 100% match on a 3% deferral, for instance, a plan could match 50% up to 6%.

Other employers, realizing the long-term costs to the company if employees do not retire on time, have decided that it makes business sense to offer a more-generous match to employees. According to the 60^th Annual Survey of Profit Sharing and 401(k) Plans by the Plan Sponsor Council of America, it was found

[1]Employee Benefit Research Institute. “2018 Retirement Confidence Survey.” April 2018.

[2]Plan Sponsor Council of America. “PSCA’s 60th Annual Survey.” Feb. 2018.