If you watch television you may have noticed commercials from financial institutions that encourage retirement savings. There’s one, in particular, that stands out for me. A financial expert gives people ribbon. Each person stretches the ribbon as far as it’ll go across a timeframe laid out in the grass.
The goal is to show how far the money they’ve saved for retirement will—or won’t—last. Sadly, most only have enough saved for five or six years!
The commercial’s concept may be goofy, but its underlying message is scary. It highlights an important message when it comes to our collective financial wellness. According to a recent survey by GoBankingRates, almost half of all Americans are on track to retire with less than $10,000.
The Bureau of Labor Statistics says only 16.5 percent of people have more than $300,000 saved for retirement, and folks age 65 and over spend about $46,000 a year.
We could all be in trouble, unless we do something. As an employer, you can encourage retirement savings with communication. Educate your employees on what they need to know (e.g., Social Security probably won’t be enough). Help them set themselves up well for the future, when they’re no longer working.
Highlight the Power of the 401(k)
The 401(k) plan has been around for decades as a retirement savings tool. Many Americans still don’t know how it works or why they need to participate. Show them. Targeted campaigns illustrate to employees all these plans offer them and their families. To increase engagement and encourage retirement savings, promote tax advantages and the company match, if appropriate.
Highlight and expand on those “what’s in it for me” points when you describe your plan. If your offer a company match, make sure your employees know how much to contribute to get it. It’s one the most powerful savings growth tools available to your workforce. If employees ignore the company match, they ignore free money.
Promote Retirement Planning Tools
Saving for retirement can be intimidating. Many people don’t know how much they’ll need to save and where. Planning tools, like Financial Engines, which is available to us at Trion, can help if people know they exist. Put them front and center in your communications and remind employees how to access and use them to encourage retirement savings. There may be some cost involved to maintain these tools, but the payoffs in employee goodwill and financial security could be enormous.
Highlight Other Savings Opportunities
If your company offers deferred compensation, employee stock purchase plans, pension plans, profit sharing, money purchase plans, or other retirement savings vehicles, point them out in your benefits communication. Teach employees as where they go for more detailed information. Provide links to carrier documents where they can learn more.
Saving for retirement is about more than stocking away money in a 401(K) plan. Use your communications to make sure employees take advantage of all savings opportunities. That way, they can have more funds to put towards their retirement contributions. Show how they’ll pay a lower copay with a visit to an urgent care clinic versus the emergency department. Describe the money-saving benefits and efficacy of generic drugs. Remind them how a covered bi-annual dental visit can prevent costly problems.
Employees may not be aware of everything you offer to help them save money. Show employees you’re serious about helping them build a nest egg for their futures. Encourage retirement savings with your communications so sure they know what you’ve got, and how to get it.