Combine Design and Education to Boost Employee Savings
On average employees save about 7.50% when they need to save about 15%— even if they start early. And employees starting later in life may need to save 20% or more.
Common reasons include procrastination on decision making necessary for change, and a general bias to leave things as they are.
Less obviously, most folks don’t feel an emotional connection with their future selves. The distress of inadequate retirement income isn’t immediately tangible, so employees aren’t inclined to forgo current consumption in exchange for future well-being.
Plan design changes and insightful education methods can make a difference. For example, automatic enrollment and contribution escalation provisions combined with education to help employees connect with their future selves.
One-on-one, household- focused employee counseling by a fiduciary advisor, based on individual profiles, can make huge difference in savings rates. It can also get employee "unstuck" and moving forward from difficult financial and life decisions.
These tactics and others can get more employees into your plan and on the path to retirement success.
If you are not getting ideas like this from your current plan provider it may be time to review your options.