What is the future of retirement plans? What new trends will 2022 bring?

For the past 40 or so years, 401(k) plans have practically never changed. Retirement savings and 401(k) plans have also remained passive since their inception. Participants set their rate and watch it grow over time. With introspection and planning, retirement can be an exciting chapter in someone’s life. Employers can reward hard-working employees by offering the best retirement plan.

Today, emerging tech platforms and stock accessibility are driving a more active investment style. In 2022, my hope is that retirement readiness becomes more inclusive and approachable through technology such as automation, and that more small businesses make it a priority to invest in their employees through affordable 401(k) plans. Although modern technology can produce faster results, the human component behind automation should also remain a priority in delivering efficient technology.

Here are four retirement-centric trends you should see in 2022:

Easier retirement readiness

Outside of typical 401(k) plans offered through employers, retirement readiness—how financially prepared someone is to retire—is information overload for most Americans. For the sake of diversification, investment options have gone out of control with too many choices and too many employee-paid fees.

Readiness requires financial preparation, discipline, clearly defined goals and a plan. Realizing that retirement will come sooner than later doesn’t make readiness any easier, but it can help you with decision making. While most small businesses avoid offering 401(k), a retirement plan is an investment to gain and retain top talent.

Many small businesses are put off by the price of retirement benefits. Since they were not initially designed for small businesses, the pricing structures can be unfriendly to smaller enterprises. Fees for setting up a plan and other items have become unnecessary. That needs to change and for some retirement plans, it already has changed. 

Affordable and accessible retirement plans

I would like to see more affordable, accessible and modern retirement plans in 2022. Affordability plays a significant role in saving for retirement for employer and employee. In 2022, a flat rate per plan participant and elimination of hidden fees would be ideal.

Keeping the focus on retirement will increase top-tier talent retention for the employer and job security for the employee. Don’t let the cost of administering retirement plans hold you back from securing the best employees. Make retirement a tangible belief as we enter 2022. Let’s not limit 401(k) accessibility, let’s increase it so more people can reap the benefits of saving.

State-mandated retirement plans are a recent change in legislation that has already started to encourage saving for retirement and will continue to take place in 2022. These state-mandated programs will provide more accessibility to those who are not offered them through an employer. As of October 2021, there are nine states with state-required retirement saving programs for employees. Those states are California, Illinois, Maryland, Massachusetts, New Mexico, New York, Oregon, Vermont, and Washington. For example, in California, businesses with five or more employees are required to provide the state retirement program, CalSavers or a private retirement plan by June, 2022.

More small businesses on board with retirement

Without stretching internal resources too thin, 401(k) plans are an ideal way to invest in employees. Programs that cater to small businesses and offer affordability that also have the power and flexibility needed by larger organizations for more complex needs are the future of 401(k). Leveling the playing field gives professionals a chance to work for small businesses if they choose, but enjoy the same benefits of working for a larger corporation. 

In 2022, you might see 401(k) plans with auto-enrollment features, safe harbor plans, and different vesting and eligibility options. For small businesses and larger businesses, programs with employer matching contribution options, new comparability profit sharing and supported control groups that surpass current trends and are what more companies will strive for in 2022.  

Modern 401(k) technology with a human component

Automated systems are found to be a replacement for humans in the physical workplace. I believe automated technology excels only because of engaged, human advisors working in conjunction with the innovation of the system.

The right provider encourages and supports collaborating with advisors but is keen on employees being able to manage their 401(k) plans on their own if they can. Leveraging app platforms that are designed to streamline that process is crucial to the future of 401(k) plans. Leading providers won’t just offer the best plan, they’ll also offer the best people behind those plans.

 In 2022, the trend will be faster negotiation agreements and less forms back and forth, making the 401(k) process for employees and employers seamless.

Daniel Beck is the CEO and co-founder of 401GO. Driven by an insatiable curiosity, he has launched numerous businesses in a variety of industries. After multiple successful exits, his focus has shifted to helping hard-working Americans prepare for retirement and enabling small businesses to proactively help their employees work toward financial freedom. Daniel’s entrepreneurial success was the direct result of building a talented team of employees and partners. Offering a solid set of benefits was always a priority in his previous companies but a retirement plan benefit was always out of reach. Out of a sense of frustration with the financial industry and the realization of a big market opportunity, Daniel and his long-time business partner and brother, Nate, set out to create 401GO, the solution they wish they had as small business owners.