Auto-Enrollment: Breaking Barriers to Retirement Savings
Saving for retirement can be challenging for many employees. Financial constraints, lack of awareness, or simply not knowing where to start often hold them back. Auto-enrollment, which automatically signs employees up for their company’s retirement plan, has proven to be a game-changer in overcoming these barriers.
By automatically directing a percentage of an employee’s income into savings, auto-enrollment eliminates the need for employees to take the first step—a step many might delay or avoid. For those living paycheck to paycheck or managing competing financial priorities, this small nudge can make a significant difference in building long-term financial security.
Auto-enrollment also normalizes saving for retirement. Many employees find that small, consistent contributions—such as 3% or 6% of their paycheck—are manageable. Over time, these contributions can grow substantially, thanks to compound interest and employer matching. Watching their savings grow often inspires employees to maintain or even increase their contributions.
At a recent TPSU program, Fred Barstein, founder and CEO of TPSU, TRAU, and 401kTV, discussed auto-enrollment with Brian Thompson, president of RockWay Wealth Partners. They addressed common concerns, such as employees feeling uneasy about payroll deductions. Brian noted that these worries usually fade after implementation, as participation rates are high and negative feedback is rare.
They also highlighted how auto-enrollment is particularly valuable for employees who might not save otherwise. Brian emphasized the importance of showing employees how even small contributions, like 6% to 10%, can grow into significant savings over time. Visual tools help employees understand these long-term benefits, even on tight budgets.
Auto-enrollment removes barriers to saving and fosters a culture of financial security. It’s a simple but powerful tool to help more employees plan for a secure and comfortable retirement.
Read the Full Transcript Here:
Fred Barstein:
Greetings. This is Fred Barstein. I’m the founder and CEO of TPSU, TRAU, and 401kTV. Just completed a program here at Drake University, and I’m here with our adjunct lecturer, Brian Thompson, who is the president and founder of RockWay Wealth Partners. Welcome, Brian.
Brian Thompson:
Glad to be here.
Fred Barstein:
Okay if we ask you a few questions?
Brian Thompson:
You bet.
Fred Barstein:
Very good. So before we do, tell us a little bit about yourself and your firm.
Brian Thompson:
Yeah. RockWay Wealth Partners is a combination retirement plan advising and wealth advising practice. Independent, fee-only practice.
Fred Barstein:
Right. Co-fiduciary.
Brian Thompson:
Sometimes. Co-fiduciary sometimes.
Fred Barstein:
Sometimes. So one of the things that we heard, and we’re always talking about ideal plan and auto enroll and that, but we did have some concerns. What were the concerns that you heard today and how can you help our people to understand how they can overcome those concerns?
Brian Thompson:
Yeah, I find there’s a little more apprehension on the front end before it’s actually implemented because they care about the employees feeling of being deceived maybe in some way or just feeling like they don’t want money taken out of their paychecks, but that’s not usually the result after it happens. Typically, there’s not a lot of negative comments about it and the participation rate is typically very high.
Fred Barstein:
Right. What about the concern that people say, “Oh, they can’t afford it.” They make so little and they’re making ends meet. How do you overcome that?
Brian Thompson:
It is a concern, and I think you have to put it out there. But part of that reason that it’s a concern is also what lends to its importance of the impact it can have on folks who maybe wouldn’t save as much on their own without it being helped through their paycheck that way. Those folks don’t always have as much money to save, but they don’t make those steps on their own either.
Fred Barstein:
Right. And showing the impact of just putting a little bit away, maybe 6%, 8%, 10%, but just start somewhere and maybe grow. Graphically showing that impact is what it can be when they retire can help as well.
Brian Thompson:
Yeah, very much. So showing the end result and sort of reverse engineering back is very powerful.
Fred Barstein:
Right. That’s why with the ideal plan, we show here’s what somebody is, they can have a million dollars versus 250,000. Even making 60,000 on the average when they retire, they can have a million dollars. So it’s doable.
Brian Thompson:
That is very doable, and that’s a big misconception that you have to have higher incomes to have these retirement values at the end of your career. But with those auto escalations, they don’t feel like much per year 1%, but they add up to a lot.
Fred Barstein:
A lot too. And so final question. It’s a long day for people to come for TPSU. What is the number one value you think that a plan sponsor gets by attending?
Brian Thompson:
I would say empowerment to a degree because they have more confidence typically in understanding their job and the impact that it has, not only on the leadership, but on the end user, which they’re one of them too. They’re an employee in the company. And the feedback is always very good. There’s just really never any negative feedback. We have repeat companies every time.
Fred Barstein:
Right. And I think they have many, many jobs and being able to spend and focus time on this one as well as others, but I think it really elevates it and makes them more important. So thank you for today and thank you for being a plan sponsor, plan sponsor, a TPSU lecturer. And thank you for watching 401kTV. Please stay tuned.
