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The path to a secure retirement seems to be more difficult to find for today’s workers. In fact, Americans’ confidence in their ability to retire comfortably is at historically low levels. Data from the Employee Benefit Research Institute’s (EBRI) latest Retirement Confidence Survey suggests that, since the recession began in 2008, Americans plan to work longer than current retirees and are more concerned about job uncertainty than planning for retirement. A new report by the ADP Research Institute℠, a specialized group within ADP, discusses how these prevailing attitudes about work, debt and savings levels, and retirement planning present opportunities for savvy companies to offer user-friendly education about retirement and to set up retirement plans with the kinds of options that benefit employer and employee alike.
The Need for Retirement Readiness is Gaining Traction among American Workers
A cross-section of the economy, represented by organizations like AARP, the National Federation of Independent Business, the American Savings Education Council, The Business Roundtable, and the Service Employees International Union, has issued a national call to action for the business sector and government to collaborate in developing solutions for, and improving education about, Americans’ long-term financial security needs. These awareness efforts appear to be having an impact, particularly with younger generations. Studies show that younger workers are very cognizant of the need to set up retirement savings plans, and place a priority on seeking employment with a company that offers a retirement plan, or a plan that includes some form of employer contribution.
Retirement Plan Benefits with an Educational Component Offer Broad Appeal
EBRI data show that those workers enrolled in employer-sponsored savings plans report higher confidence in their ability to have enough money to retire comfortably (64 percent) as compared to those who do not participate (48 percent). By supplementing retirement plan offerings with employee education about planning and saving for retirement, employers can further encourage workers’ retirement readiness. Retirement experts indicate that younger workers are more willing to embrace opportunities to plan for and to save for their retirement—if their employers can make the process as painless as possible.
Build Employee Preferences into Retirement Readiness Programs for Optimal Impact
When employers set out to design retirement planning benefit programs, they should cater to the learning styles and communication preferences of all employee segments. In the case of Gen X and Gen Y workers, this means providing 24x7 access to interactive educational tools, research data, and planning resources via an online portal, social media, or mobile applications. Employers should also consider some of the newer 401(k) options, like automatic opt-in and target date funds (TDFs), which tend to appeal to younger workers. Older employees, meanwhile, still prefer to receive information by more traditional channels, such as email or postal service. Other approaches, including “brown bag” lunches or small group informational sessions, provide additional opportunities for employees of all ages to learn more about retirement saving and planning.
Retirement Planning Benefits Increase an Employer’s Competitive Marketability
Opportunities are there for employers of all sizes to provide information and access to a benefit that will contribute to employees’ job satisfaction while increasing the company’s reputation as an attractive place to work. Investing the time to develop a defined-contribution retirement plan that takes advantage of the latest best practices is an important step toward becoming an “employer of choice.” According to the American Savings Education Council, providing a retirement benefit adds to the competitive marketability of a firm. Providing employees with valuable information about the company’s retirement plan and effective long-term financial planning further enhances its “preferred employer” status. This advantage will become even more valuable as Baby Boom generation workers retire and fewer younger workers are available to replace them.
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