4 ways to help all employees prepare for retirement. Data suggests that most U.S. households are behind on retirement savings. Here’s how companies can help their employees prepare for retirement.
As a large number of Americans approach retirement age, many worry about rising costs. Employers are worried, too — 75% of employers fear that employees don’t have enough retirement savings, according to a TIAA survey and another 64% worry that employees may outlive their savings.
Learn how companies can help all employees — from new hires to those about to retire — prepare for retirement and financial stability in future.
About 8 in 10 pre-retirees cannot afford to retire
Most pre-retirees, or people 50-64 years old, do not have enough savings for retirement. In fact, according to a McKinsey study, over 80% of U.S. pre-retiree households are financially unprepared for retirement.
However, the actual percentage may be higher. This is because 1/3 of people have a false sense of confidence around their retirement preparedness, per the same McKinsey study.
Unforeseen and external factors can keep people from reaching their retirement goals, or even stop them from making retirement a priority. Here are three common challenges pre-retirees face, as they consider retirement:
- Inflation is on the rise.
Overtime, inflation can erode the purchasing power of the dollar — meaning the same dollar today won’t buy as many goods in the future. In turn, this can make retirement more expensive, as the dollar becomes devalued. It also means that people will have to save more now to account for future losses during retirement.
- Focusing on other financial goals.
Some people are focused on paying off student loan or credit card debt, as opposed to saving for retirement. Others may be looking to buy a home or just simply make ends meet — for this month. Regardless of one’s situation, not everyone’s focus is on retirement and not everyone prioritizes financial goals in the same way.
- Unable to afford long-term care.
The older people get, the more assistance they may need with daily activities and care. According to a Health Affairs research article, by 2029, 60% of seniors will have limited mobility and 20% will have a high need for health care and functional assistance. However, more than half won’t be able to afford the care they need.
4 ways to help all employees prepare for retirement:
Here are 4 ways companies can help their entire workforce prepare for retirement:
1. Offer a holistic financial wellness program.
Preparing for retirement requires more than just saving, it requires intentional planning and sometimes advising. However, not everyone can afford access to these resources.
Consider investing in a holistic financial wellness program, which helps employees reach both short-term and long-term financial goals. Regardless of an employee’s situation or income level, a quality financial wellness program will provide personalized advice, for the near-term and long-term.
2. Consider auto-enrollment to encourage all employees to prepare for retirement
Auto enrollment is a company program that automatically enrolls all employees in a 401(k) or another retirement plan. The goal of auto enrollment is to increase employee participation in retirement benefits, but it also helps employees save earlier, and longer over time. A Principal survey found that 84% of employees say the key reason why they started saving for retirement so early is because they were auto enrolled by their firm.
3. Help employees prepare for retirement by educating them on their retirement benefits
Moving can be costly, especially when moving out of state for a new job. For instance, in the Chicago, Ill. metro area, the median asking rent is $2454 per month, according to Redfin data, and $4000 in the Boston and New York metro areas.
To help reduce the financial burden of moving and housing, some leading companies have invested in relocation support for employees (e.g., company-sponsored moving services, subsidies or even temporary corporate housing). By offering relocation benefits, companies can support housing security for all employees, while themselves apart from the competition.
4. Start a company match program
A popular incentive companies use to get employees to save for retirement is by starting a company match program. When an employee contributes to their retirement fund, under a company match program, their employer will contribute the same amount, or in other words, “match” the contribution. This can help employees reach their financial long-term goals, with the financial support of their firm.
Need a financial wellness solution for your team? Try Best Money Moves!
Best Money Moves is a mobile-first financial wellness solution designed to help employees meet their most top-of-mind financial goals. With budgeting tools and personalized money coaching, users can easily receive comprehensive financial advice right from their phones.
Focused on user-friendliness, Best Money Moves is designed to bring financial wellness resources right to the fingertips of employees. Our dedicated resources, partner offerings and 700+ article library make Best Money Moves a leading benefit in improving employee financial wellbeing.
To learn more about Best Money Moves Financial Wellness Platform, let’s schedule a call. Contact us and we’ll reach out to you soon.