The Goal: Increase retirement savings; but can you do it without the heavy-lifting? Yes, there are some easy ways that plan participants can increase retirement savings – without breaking-the-bank! Amidst the turmoil surrounding this era of inflation and economic and market uncertainty – everyone is watching expenses. Employees may be tempted to opt out of the company 401(k) plan or reduce their savings rate. Employers seeking ways to engage their workforce and encourage them to stay the course with their retirement savings may benefit from these seven tips, recently compiled by BenefitsPro:
Tip #1: Offer an employer match. Matching employees’ contributions to the 401(k) is a proven way to entice your workforce to save at least enough to qualify for the match. Many employers offer a dollar-for-dollar match, or a percentage of income.
Tip #2: Use automatic enrollment with an opt-out. Plans that auto-enroll employees typically have higher participation rates, especially if the employee has to make an active selection to opt out. Most employees choose “the set it and forget it option,” remaining in the plan and contributing without thinking about it.
Tip #3: Make benefits available to more of your workforce. Considering offering retirement plan benefits to part-time and new employees. Not only will this help you attract and retain talent, removing barriers to entry like waiting periods for eligibility will encourage workers to save early and often for retirement.
Tip #4: Offer target date funds. Offering ready-made, diversified portfolios that make it easy for employees to invest for retirement may help them feel more confident in their portfolio decisions. TDFs take the guesswork out of choosing a diversified portfolio while helping to minimize risk and save more for retirement. Target date funds could be one of the simplest ways for plan participants to increase retirement savings!
Tip #5: Consider a profit-sharing option. Profit sharing not only encourages employees to save, it also motivates them to hit company milestones. If the company achieves a profit target, for example, employees would receive an additional contribution to their retirement account. It’s a win-win for the company and employees.
Tip #6: Offer financial wellness. Helping employees better understand how to manage their finances day-to-day improves their overall financial health and makes them more likely – and willing – to save for retirement!
Tip #7: Provide free financial counseling. A financial advisor partner or counselor can help employees set realistic money goals, from creating a budget to choosing their retirement investments to feeling confident about the decisions they’re making for the finances both today and tomorrow. It also shows you care about your employees’ financial wellbeing, and being less stressed about money means they’ll be more productive and present while on the job.
Plan sponsors should be aware of these simple tips which can help plan participants to increase retirement savings – without a big impact on the “expense-side” of the ledger.
