Everyone wants to believe there’s some simple solution to early retirement, but lately it seems more and more like retirement is a luxury; 52% of American households over age 55 have no retirement savings, beyond any Social Security payments they’ll receive, which is a financially untenable position. Ask these individuals what they need to be better prepared for their post-work lives, though, and the majority will tell you the responsibility rests with employers.
Though some employers do offer retirement savings plans, across the board very few individuals have access to comprehensive financial planning services – but they are asking for these tools. By embracing workplace financial planning initiatives, employers can enhance employee retention and satisfaction and provide them with a more secure future.
It’s not just employees who are worried about retirement; rather, according to one study, only 16% of companies state that they’re “very confident” their employees are financially prepared for retirement. The problem is that, despite their low personal ranking of in-house retirement services, only a small minority of these companies are responsive to employee feedback regarding retirement services. But it’s never too late to start. When it comes to financial planning, the rule of thumb is simple: start where you are.
Retirement Planning Basics
There are many different ways to approach retirement planning from an employer’s perspective, but one way to address employees’ needs is by structuring your in-house services around different major life events. That’s because the only way for an individual to successfully build up to the major savings needed for retirement is by addressing day-to-day expenses and regularly reevaluating any financial plan.
In practice, then, in-house workshops should focus on major financial concerns at different life stages. Younger employees may need help managing educational debt, taking out a mortgage, or overall assistance learning to save money and stick to a budget. And older employees may be concerned about paying for their children’s education or be more focused on planning for illness or disability. At every phase, these workshops should include retirement savings in their scope, but employees won’t thrive if they feel their only financial goal is retirement. All financial goals are ultimately intertwined.
Be A Booster For Savings Programs
Another important aspect of employer-led financial planning is offering workplace-backed savings programs like automatic 401(k) enrollment – and employees want to be supported in saving in this way. The current problem is that only 18% of workplaces automatically enroll employees into such a program, typically because this can mean added costs for the company.
Employers need to recognize that the added benefits of supporting employees’ retirement savings far exceed any added costs – especially when they account for improved retention rates and increased employee satisfaction, the added expenses simply dissipate.
Retirement savings is no single individual’s responsibility; it’s why we have Social Security in addition to personal savings and employer-supported programs. When employers fail to provide that added level of support, many employees enter retirement vulnerable and unable to afford basic necessities. Financial planning services, then, must be available early, often, and in ways that are relevant to each employee as they move through their careers.