For decades, companies have been offering retirement plans to their employees as a pretty good benefit that most people appreciate. That is, when people actually used it.
Some workers haven’t been taking advantage of those plans at all. Others contribute, but they don’t have the most complete grasp of how and why to save for retirement. The dismal statistics on retirement savings have been a giant red flag that company 401(k) and other savings plans aren’t completely successful at getting people out the door with enough money to live comfortably after the end of a job.
But a new survey could motivate your employer to do more to make sure you’re ready to retire when the time comes.
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Most employers see a danger
The survey by benefits consultant Willis Tower Watson finds companies are growing more alarmed at the financial shape of their retirees-to-be.
Nearly 6 in 10 employers say that lack of retirement readiness is a top danger. Those that offer only a defined contribution plan, such as a 401(k) or a 403(b), and not a traditional pension are especially concerned, says Dave Suchsland, senior retirement consultant at Willis Towers Watson.
When older workers are afraid to retire, that causes staffing bottlenecks, Suchsland says. “People remain in the company, and that potentially blocks other positions,” he says. “It doesn’t allow new opportunities for other people.”
Employers are now starting to consider ways to promote retirement readiness.
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Financial wellness and literacy programs
Suchsland says you can expect more plans to enroll workers automatically, without their explicit approval. (People are always free to opt out, if they want.) Also, be prepared for more auto escalation, meaning the amount of salary you contribute to the plan will automatically increase, to help you ramp up savings.
Employers have an interest in helping you get your finances under control. They want you to be able to save enough for retirement and reduce your financial stresses in your later years. Look for programs with names like “financial wellness” or financial literacy,” which can teach you how to make a budget and stick to it. The information may be come in the form of an online webinar or access to software.
Some new programs might address more specific issues. Basic financial literacy might be offered to those who are living paycheck to paycheck, while programs providing advice for dealing with student loan debt might target millennials.
Suchsland says some workers may learn through the new generation of workplace programs that they’d be better off paying down debt than saving for retirement, at least in the short term. At the other end of the spectrum, some baby boomers will be told that they’ll need to contribute substantially larger amounts of money to get where they want to be.
Search for high-rate IRA money market accounts to help bolster your savings.
Would a financial literacy or financial wellness program help you save more in your 401(k)? Talk to me on Twitter: @jill_cornfield.
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