Encouraging employees to enroll and personally contribute while matching contributions to retirement accounts is perhaps the most important thing you can do for your employees. (Photo: Getty)
A retirement crisis is looming for millennials and Gen Xers now that they are taking the baby boomer’s place at the heart of the U.S. economy. A diminishing social security budget combined with a longer life expectancy for younger generations is leading some politicians to call for the full retirement age to increase from 66 years old to 68 years. Millennials have also reported that they are not saving for retirement, instead spending their income on more short-term goals like paying down all of that student loan debt.
The stresses of the retirement crisis have created a climate of uncertainty and fear around the limited possibility of retiring comfortably, if at all. According to the U.S. Government Accountability Office, nearly half of all baby boomers approaching retirement have nothing saved in a 401(k) or other individual retirement account.
Stress takes a toll on employee productivity and morale, leading to lost hours of work and less effective work all week long. Worried employees take more sick days, quit more often and contribute to a negative climate in the workplace. Employees want to achieve positive outcomes, both for their own wellness and for their companies. They just need a little help.
Wellness and benefits are both critical opportunities for employers to revitalize their workplaces and give employees needed support in an uncertain environment. Helping employees learn about and engage with their benefits can limit damaging stress and bring everybody back into the office refreshed and more positive about the future.
|Implement the benefits that will help the most
Benefits are one of the most important tools in an employer’s tool belt, whether helping to solve the retirement crisis or for improving the environment of your workplace. As we have discussed previously, there is a tendency for companies to fight the symptom of a negative in-office atmosphere instead of the problem: employees worried about their potential inability to ever comfortably retire. Eye-catching perks like pool tables or in-house baristas can certainly make the office seem like a more fun place to go; however, these types of benefits do not address the retirement crisis for employees just starting out or those about to retire.
Encouraging employees to enroll and personally contribute while matching contributions to retirement accounts is perhaps the most important thing you can do for your employees. It is a powerful tax-deductible incentive for employees to contribute as much as they can to their retirement accounts. Advisors suggest a total contribution (employee and employer combined) of 12 to 15 percent. It is also a way to find and keep the best talent, as research suggests that retirement benefits are a reason that many employees accept job offers and a reason they stay at the companies they are currently working for.
|Drive participation and engagement
Neither your employees nor you will be able to reap the rewards of a benefit program if employees are not participating in them. Particularly for younger employees without as much experience with fiscal responsibility, auto-enrollment and auto-escalation are the watchwords for bringing down employee retirement stress and raising their productivity.
There are a few key ways for employers to engage with employees about the benefits available to them so they know what their options are and can make educated decisions. These include:
Benefits Fairs: These serve two very important purposes for your employees and your company. First, they are a clear demonstration of the benefits that come from employment at your company. Benefits Fairs show everyone on the team how much you want to support the eventual retirement and general wellness of your employees. They also give employees an opportunity to learn how their benefits work straight from the partners giving them. They can sit down one-on-one if they have any questions and require any additional information. Holding benefits fairs at the same time every year, preferably in advance of open-enrollment, can be an educational experience that leaves all of your employees with the knowledge they need to make an educated plan for themselves.
Mandatory group meetings: Especially for new employees, group meetings about benefits and retirement can be incredibly important for employee retirement outcomes later on. Schedule regular quarterly meetings for groups of employees and a company benefits manager to discuss employee benefits and related issues. These discussions will set your employees up for success in addressing any retirement issues they may have.
Regular Advisor visits: Checking in is one of the most valuable things an employer can do to make sure that benefits are having the impact that they need to. These can be as casual as brief question and answer sessions, or as in-depth as a full breakdown of employee’s retirement accounts and the steps they are implementing to guarantee their retirement success.
To ensure this success, advisors may perform a gap analysis. This approach looks at the eligible age of retirement and considers the actual, optimum age to retire. Among other indicators, an individual’s account balance will help dictate the most practical and financially feasible time to retire, or the “allowable” age. For this reason, the optimum age of retirement may not always correspond with the eligible age of retirement. Advisors can help close the gap between the eligible and allowable retirement ages by offering different investment strategies to achieve an employee’s long-term financial goals.
Regardless of which option would work best for your company, though, “check-ins” ensure that everyone involved is safe in the knowledge of how they are benefiting their role in that program, and their role in their retirement.
|Never stop educating
Educating your employees is another vital way to improve retirement outcomes. A major component of retirement uncertainty comes from confusion, both about how much money they need in retirement and also what age they might be when they retire. It’s not something that is regularly covered in high school or college, and there is a lot of conflicting information online.
As an employer, you can use a wide variety of tools to create a well-informed workforce to end financial illiteracy, including webinars, newsletters, group meetings, and one-on-one meetings, not to mention social media apps provided by those that run and advise on your plans. The benefit is for you both: They become better equipped to navigate their own retirement savings, and you have a more productive and happy employee.
The value of engaging with your employees and implementing these benefits cannot be overstated. The retirement crisis is real and the wave is cresting for the vast majority of Gen X and millennials in the workforce. Through engagement and education, employers have an opportunity to help solve the retirement crisis and create a competitive advantage for themselves in the process.
India Suter is the director of business development for Asset Strategy Consultants, Hunt Valley, Maryland. Working directly with benefits managers, plan sponsors and HR executives, India notes that success begins with being a good communicator and a better listener.
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