No need to point the finger – when it comes to retirement readiness missteps for U.S. employees, there is plenty of blame to go around.
First of all, workers aren’t saving enough for retirement: According to data from Transamerica, a leading provider of life insurance, retirement, and investment solutions, Baby Boomers have saved $164,000 (estimated median) in all household retirement accounts, Generation X has saved $72,000 (estimated median), and Millennials have saved $37,000 (estimated median) – these savings are needed to last two or more decades in retirement.
Second, they aren’t saving enough in general. Another survey reveals that any surprise expense – even as small as $10 – would cause 28% of Americans financial worry, and that some 80% couldn’t handle any emergency expense over $1,000.
Americans’ biggest retirement mistake
However, employees’ third – and according to one CNBC analyst, the biggest – retirement mistake is ignoring their employer’s 401(k) match. Seventy-nine percent of employers offer a 401(k) match, Transamerica reports. However, other data show 23% of employees don’t take it.
Eric Roberge, a certified financial professional, called that employees biggest retirement mistake. “If you have a 401(k) at work … and your employer’s willing to give you 100% of the first 5% that you put in your 401(k), you're missing out on free money.”
Why employers could be to blame
And since no one would ever pass up free money, where have employers gone wrong in informing, educating, and promoting retirement plans, and the company match with them? A lack of awareness of employees’ needs in three key areas: topics, training, and tools.
What do you know about employees’ saving habits? Their family status/life stage? Debt levels? Their preparedness for a financial emergency – even a small one? How a financial emergency would make them feel, even if they could afford it? What is their general risk tolerance? Do they understand basic budgeting, and how to manage their “one wallet” to balance their benefits needs and their family bottom line.
Spoiler alert: This is all data employers, and HR/benefits pros specifically have access to – or could get access to in aggregate form with the right technology. And it’s information that employers can and should provide. Employees under financial stress can lose up to three hours per work day dealing with financial issues. Given that statistic, the business case for a benefits technology investment to help achieve greater financial wellness makes itself.
What to do about it
In addition to technology, there’s a great low-tech way to reach employees about retirement planning and other financial wellness topics: Talk to them.
There are 365 days in a year; there’s no rhyme or reason to squeezing benefits communication into just 14 of them. However, too many well-meaning employers fall into the trap of trying to communicate a year’s worth of messages in the two weeks during Annual Enrollment.
So, expand your mind – and the calendar! Communicating year-round gives benefits messages room to breathe, and provides an opportunity to break complex concepts like health insurance and financial planning into bite-sized chunks that feel less overwhelming for employees.
Tie monthly or quarterly communication initiatives to natural engagement points and/or decision-making moments in employees’ lives – including back to school, summer vacation, holidays, birthdays, work anniversaries, and more.
Expanding the calendar also allows for stronger and more meaningful calls to action beyond simply “Enroll now.” CTAs can get thrown open wide to include: “Protect your future: Increase your HSA or 401(k) contribution;” “Protect your family: Consider supplemental life;” or “Are you throwing away free money? Getting your 401(k) match is easier than you think!”
All are ways to help employees avoid the retirement mistake they can least afford to be making.