How Employers Can Help Employees Build A Retirement Nest Egg

Can Non-Savers Be Saved?

How Employers Can Help Employees Build A Retirement Nest Egg

The United States Senate unanimously designated October 22 through October 28 National Save for Retirement Week to raise public awareness about the importance of adequate retirement savings and the availability of employer-sponsored retirement plans.

What is your company doing to encourage employees to save?

With inevitable changes in Social Security, skyrocketing health care costs, and lifespans into our 90's, future retirees (which includes all of us if we're lucky enough to live that long) have our work cut out for us.

The number of employees with traditional pension benefits is shrinking. In 1974, 42% of workers were assured a lifetime pension income at retirement. Now, only 20% of workers have this benefit, and the trend is continuing downward.

In spite of this drop in employer-paid retirement benefits, money for retirement is still something most employers offer employees. However, instead of it being a paternalistic pension plan, it's now the "do-it-yourself" plan – meaning a 401(k), 403(b), or other "defined contribution" plan. The challenge for employees is both in the "doing" and in the "yourself." Even when employers offer matching contributions, some employees don't seem to understand they are leaving "free money" on the table if they don't put any of their own money in the plan.

In a recent survey of 200 large companies, only 18% feel confident that their employees will retire with sufficient assets. Even more disturbing, just 12% are confident that their workers understand their retirement benefits. The right kind of employee communications and financial education are two ways employers can make a difference.

Here are some tips to help turn your non-savers into savers:

§ Talk up your company's retirement plan using employee communications that originate from your own Human Resources department. Don't rely solely on the generic materials from your vendor. Customized communications also allow you remind all employees that your company (not the vendor) is responsible for providing this valuable benefit.

§ Allot enough time in your new employee orientation to cover the highlights of your retirement plan. If your plan requires a waiting period before new employees can participate, get those employees together again when they are eligible and make signing up fun and easy. Consider making this a "lunch and learn" meeting, complete with door prizes.

§ Work with your vendor to hold evening financial planning sessions. Invite spouses, provide dinner or snacks. Advertise the meetings in a variety of ways, such as in your company's newsletter and intranet, via e-mail, and on posters in break rooms. Send an invitation to home addresses, addressed to the employee and spouse.

§ Customize your communications as much as possible. For example, if you can identify employees who are not participating in the plan, send them a letter showing their pay level and how much they would need to set aside each paycheck to receive the full company match. Do the math for them and show how much that equals in a year.

§ Track your participant activity to see how much your stepped-up focus on retirement savings has turned your non-believers into savers.

With the right mindset, education and encouragement, even the youngest and most disinterested employees can accumulate the money they'll need to support themselves in their golden years – even with a "do-it-yourself" retirement plan.

For further information, please contact Julie Herrick Williams.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.