Most plan sponsors offer a retirement plan to attract and retain talent with the goal of ensuring their employees can retire with confidence. The challenge lies in understanding how to help employees ...
What If: Your Employees Aren’t Retirement-Ready?
Most plan sponsors offer a retirement plan to attract and retain talent with the goal of ensuring their employees can retire with confidence. The challenge lies in understanding how to help employees realize this goal.
Retirement can seem a long way off, and ultimately unimportant for many employees — until they realize the time to retire is just around the corner and they have saved little to nothing. In this blog, we will be discussing how you can help your employees properly prepare for retirement, leaving them satisfied with your company and ready to retire with confidence.
What If: Your Employees Aren’t on Track to Retire?
Your employees’ retirement-readiness can ultimately be attributed to how much your employees are contributing and how your plan design impacts their behavior. If your employees are largely unprepared for retirement, you may need to consider some changes. To determine this, consider:
- What is the average contribution rate among your employees?
- What is the average account balance within your company’s retirement plans?
- How are these numbers reflected in participant age or employee tenure?
All of your recordkeeping partners should provide you with information on these data points and how they compare to the industry. Once your current plan tells you about your employees’ habits, consider this: are they really on track to retire?
We can all agree that saving money is challenging. We are inundated with thousands of marketing messages daily. Social media ensures we are aware of the latest trends, while shopping and payment apps make purchasing quick and easy. Additionally, credit card companies indiscriminately offer credit cards to people starting in their teens and twenties.
Recognizing the challenges of acquiring debt and the daunting task of saving for retirement at any age, we've shifted our focus. Now, the emphasis is on simply enrolling participants in the plan and setting a savings rate that will enable them to retire comfortably. Instead of advising participants to save $1 million, we're making saving more manageable by encouraging small changes today that lead to significant results in retirement.
Ways to Get Your Employees on Track to Retire
While it is ultimately up to your employees to save up for their retirement, there are a few things you can do to help encourage them. These include:
- Revisiting your plan design, matching formula, automatic enrollment level, automatic escalation cap, re-enrollment sweeps, etc.
- Asking your partners for creative ways to ensure you, as an employer, take advantage of the contributions you’re making, and that your employees are engaged in a way that will get them to retirement.
- Remembering that communication is key. Talk to your employees and work to keep them informed with resources like 1:1 consulting, informational seminars, and other informative methods of communication.
How SWBC Retirement Plan Services Can Help
If employees CAN’T retire because they didn’t save enough, there are real and tangible costs associated with this. Your partners should be open to updating you on your employees’ progress toward retirement and providing valuable benchmarking data that will show just how well these employees’ are following their path to a well-funded retirement.
Retirement plans are not one-size-fits-all. It takes thoughtful evaluation of what works for your company, your culture, and your people to build a successful plan for your employees. At SWBC Retirement Plan Services, we know this and work hard to help your business build a plan that fits. To reduce your burden and help you quickly start the process of accessing your plan, click here to let us help!
Sara Matlock
Sara Matlock is Senior Vice President of SWBC Retirement Plan Services and also serves as a voting member of SWBC’s Investment Committee. She has more than 27 years of experience in the financial services industry. Prior to joining SWBC, Sara was Vice President of Investor Relations for Jones Villalta Asset Management, where she provided retirement planning and investment management services to high-net-worth individuals, families, and companies. Before that, Sara spent eight years at National Financial Partners (NFP) as Vice President of Members’ Services, Marketing & Communications. She worked with firms specializing in high-net-worth clients, benefits, retirement planning, and investment management. Sara received her Bachelor of Arts in Economics, with a concentration in Engineering and Mathematics, from the University of Texas at Austin. She earned the designation Chartered Life Underwriter (CLU) from The American College and her Series 7 and 65 licenses.
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