Employee 401(k) Empowerment Tools
The more your employees feel educated and knowledgeable about their retirement benefits and options, the more they’ll want to take advantage of them. Educating and empowering your employees isn’t something you have to do on your own; you can rely on a trusted retirement services provider to both optimize your retirement benefits and empower your employees to take advantage of them. See four ways you and your service providers can give your employees more tools to get retirement-ready.
The 2016 U.S. Bank Possibility Index found that 52% of Americans show overall concern about their finances. Of those people, 49% were specifically worried about paying off their debt, and 47% were concerned about paying for their monthly expenses.
Many Americans simply enroll in their company-sponsored 401(k), set a monthly contribution from their paycheck, and then leave the account alone, hoping they find enough money there when they retire in a few decades. Others neglect to enroll because they don’t understand why they need to, don’t believe they can afford to, or don’t think that saving will make retirement any more achievable.
This “sticking your head in the sand” mindset eventually catches up to individuals down the road. Educating and empowering your employees isn’t something you have to do on your own, however. You can rely on a trusted retirement services provider to both optimize your retirement benefits and empower your employees to take advantage of them. Your service provider should be a valuable resource to you and your employees. Knowing how to partner with them and what reasonable expectations are for the fees you’re paying is a great first step.
As an employer, you’re in a unique position to help employees take ownership of their retirement. The more your employees feel educated and knowledgeable about their retirement benefits and options, the more they’ll want to take advantage of them. This in turn increases their happiness with your company and its benefits package, and can be one part of keeping key talent on the team longer. Here’s how you can work with them.
Schedule Regular In-Person and Small Group Meetings with Your Service Provider
The first part of easing employee anxieties surrounding retirement planning is providing an opportunity for them to meet with a financial professional to review their accounts and learn to put together strategies for the coming years. For some employees, this time might be the only chance they have to take a breather and focus in on their long-term retirement planning.
Some service providers may hold initial oneon-one meetings with employees, but don’t always return for individualized follow-up meetings. Follow-up meetings keep employees focused on their financial and retirement goals, and will also make them feel more comfortable revising those plans as needed. One-on-one meetings provide a space for individuals to discuss their finances in a private setting, which can enable them to open up more about their plans, goals, and needs. Recurring meetings encourage employees who don’t participate yet to sign up for next year, while also enabling current participants to re-calibrate their savings rates and, hopefully, improve the focus or scope of their plans for retirement.
Employees might not learn everything they need to know to feel empowered during 1:1 meetings alone. Your provider can also host small group meetings designed to engage your employees in a dialogue about retirement planning. These usually work best when they focus on certain elements of retirement saving that are true to that group. For example, one focus could be using the average salary of the group to provide savings rate examples and what real life scenarios might mean to that group—like $25 per pay check, which is less than $20 after taxes. Smaller group meetings on topics of interest can encourage even quiet employees to interact, ask questions, participate in games, take quizzes, or apply any other tools to generate excitement around the topic.
These sessions can also be used to approach different employee demographics. Younger employees may have different concerns and goals than older employees. If you have a number of Spanish-speaking employees, you might ask that your 401(k) plan provider bring a professional that speaks Spanish to avoid any language barriers or gaps. Or, if you have a large number of high income employees, you can have the provider tailor their presentations to focus on tax strategies.
Encourage Webinar Attendance, 401(k) Videos, or Topical Reading with Service Provider
Many 401(k) service providers host webinars, or provide 401(k) videos and reading materials to support ongoing education for employees. Different from 1:1 and group meetings, webinars offer a look into market updates, plan option explanations, investing basics, and more. Promoting these webinars at work and encouraging employees to set aside 20 to 30 minutes once a quarter to focus on financial education creates a more engaged workforce.
Online Tools Like Retirement Calculators Help
Employees can utilize available online tools and resources like a retirement calculator to get a better glimpse into the potential costs of their retirement, which in turn informs the amount they want to save. Factors that go into the calculation include:
- Current monthly retirement contributions
- Expected retirement age
- Current age
- Current amount in retirement funds
- Expected monthly retirement costs
Retirement calculators work to provide a rough estimate of what employees might need to have saved for their retirement and what that means month-to-month to get them there. As situations change, like an increase in income, or in-savings contributions by employee or employer or both, retirement calculators can show a newly adjusted journey to retirement. That’s why it’s good to remind employees to use a calculator once every few years, or as their salary or monthly expenses change.
Helping Employees Picture Life in Retirement
People generally feel a disconnect between their working selves and their retired selves. This is largely because it can be difficult to picture what life will be like during retirement. So, helping your employees visualize what their retirements will look like and talking about the lifestyle that comes with it can help them better imagine what the future has in store for them. Once your employees can begin to see themselves in a retirement lifestyle, they can begin to plan for it. Your service provider should have resources available for your employees to make the connection between the people they’ll be and the financial goals they will have in retirement.
At Fisher Investments 401(k) Solutions, we offer a tool called the Retirement Navigator that builds an investment strategy with personal retirement goals in mind.
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