Take your company retirement plan to the next level this 401(k) Day

As employers finalize their 2025 benefits packages, it’s an ideal time to focus on promoting financial literacy among their employees. With 401(k) Day fast approaching on September 6, employers should seize this opportunity to energize their workforce about retirement planning. Created by the Plan Sponsor Council of America, 401(k) Day promotes awareness about retirement savings and encourages employees to take full advantage of their 401(k) plan benefits. Celebrated on the Friday after Labor Day, it signifies a fresh start to financial planning, much like how the back-to-school season symbolizes new beginnings.

The day serves as a crucial opportunity for employers to recognize the vital role they play in fostering financial literacy and retirement security among their workers. This doesn’t just start — and end — with offering a 401(k). Employers should proactively empower workers to make informed decisions that can lead to a secure retirement. Especially, considering that an employee survey Betterment conducted of 1,000 U.S. full-time employees found that only 40% of workers feel confident that they will be able to save enough for retirement.

Below are three practical steps employers can take to raise awareness and educate their workforce about the importance of long-term financial planning.

Step 1: Consider the whole financial picture

Retirement planning shouldn’t be done in a vacuum. A survey found that the top three impediments to saving for retirement are paying rent and bills (73%), home or car repair (44%), and medical expenses (42%). These and many other complex factors can impact an individual’s financial planning approach and ability to cover their essential day-to-day expenses.

Employers can support these needs by providing benefits, education, and tools that highlight the importance of integrating retirement goals with other financial priorities, such as starting or maintaining an emergency fund, managing debt, investing wisely, and planning for major life events. For workers who want to take their retirement planning to the next level, employers should also help them understand the various long-term savings tools that may be available to them beyond a 401(k) such as an IRA, HSA, and FSA.

Step 2: Automate good financial behaviors

When employees were asked why they do not use the financial wellness benefits available to them via their employer, like a 401(k), 14% state that they haven’t gotten around to signing up for the benefit(s) and 7% don’t know how to sign up. This is where automation can be a powerful tool in fostering consistent saving and investing habits among employees. By removing the need for manual intervention, automation helps workers get and stay on track with their financial goals.

This was the spirit behind one SECURE 2.0 provision that requires new 401(k) and 403(b) plans established after December 29, 2022, to auto-enroll their workers at a default contribution rate starting in 2025. While plans established prior to then aren’t required to do so, automatic enrollment has been shown to boost participation rates and lead to improved retirement savings outcomes, and any company can choose to include this feature. Companies can also consider implementing auto-escalation, which automatically increases an employee’s contributions to their retirement plan by 1% per year to a predetermined maximum of at least 10% (but no more than 15%).

While employees can adjust their contribution rate to 0% at any time, many may find that they have built up their financial saving muscles and do not need or want to opt out of the 401(k).

Step 3: Provide ongoing education

Since 56% of workers are not well-versed on how 401(k)s and retirement planning work, continuous financial education is essential to maintaining and improving workers’ financial literacy. By offering regular and timely educational opportunities, employers can help workers stay informed and make better financial decisions.

These educational touchpoints should occur in a broad range of methods such as regular newsletters, workshops, seminars, financial planning tools or even one-on-one sessions with a financial advisor. Employers can empower workers to engage with 401(k) and other financial education in a manner that suits their individual learning preferences and needs.

Throughout the year, employers can identify key moments when their workforce may need extra support, such as tax season and open enrollment. Providing timely reminders about critical market changes, retirement planning strategies, and financial regulations can help employees stay smart about the landscape and on track with their retirement goals.

Related: The 401(k) plan, reimagined: Key SECURE 2.0 changes that take effect in 2024

By implementing targeted educational programs and leveraging technology to make planning simple, employers may help their workforce build a solid foundation for retirement security. The long-term benefits of improved financial literacy are immense, not just for employees but for the overall health of an organization. This 401(k) Day, employers can take at least one step to support and encourage employees in building a secure retirement.

Harlyn Kassardjian is Head of Business Operations & Strategy, Betterment at Work.