A recent report by TIAA-CREF (“Ready to Retire”) showed that 52% of those surveyed between the ages of 55 and 64 wish they had started saving sooner for retirement. Of that same group, 47% wished they would have saved more of their paycheck. According to the survey, this occurred despite having access to an employer-sponsored plan.
While this information may not shock anyone, it stresses the importance of saving early and remaining engaged throughout the working years. For many participants this is a struggle, and they will look to their employers for assistance. Luckily, plan sponsors have tools at their disposal.
While many employers are still reluctant to auto-enroll and auto-escalate employees, it has been shown that participants accept automatic enrollment and know they need automatic increases. If a plan sponsor can automatically enroll a participant at 6% and automatically increase their contributions by 1% each year until a desired maximum, it will go a long way to helping curb the deficit issues faced by so many pre-retirees due to complacency and inertia.
More and more employers are taking a critical educational role for their employees. This means moving away from the traditional enrollment meeting towards a holistic education strategy. Studies have shown the costs of stress on employees and the companies they work for. If an employer can help their employees make better financial decisions, this could lead to greater retirement savings.
While these two areas may just be the tip of the iceberg when it comes to engaging the workforce, forward-looking plan sponsors can take an impactful role in their participants’ savings goals.