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Americans’ confidence in their ability to retire comfortably is at historically low levels. Workers in their 20s and 30s consider retirement today less of a guarantee than it may have been for previous generations. Increasing numbers of younger workers report that they plan to work years longer, and indicate that retirement is something they think about even if they may not know much about how to plan for it. These trends present an opportunity for employers to help their workforce plan for a secure retirement through a retirement readiness program — a benefit that can give businesses an edge in the war for talent. A new report by the ADP Research Institute℠, a specialized group within ADP, describes how employers can increase their firm’s competitive marketability by including retirement plans and financial planning education as part of their employee benefits package.
Young Workers’ Preferences Must Be Factored Into Retirement Benefits Programs
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. In the case of Gen X and Gen Y workers, this means providing “digital natives” with 24x7 online access to interactive educational tools and robust information sources about topics such as the advantages of 401(k) plans for retirement planning and savings. Employers should also consider some of the newer 401(k) options, including automatic enrollment and target date funds (TDFs), that younger workers show signs of appreciating.
Information and Automation Help Young Workers Develop a Retirement Savings Habit
Providing “retirement readiness” information and a variety of planning tools and opportunities to learn can create a clear competitive advantage for employers in the race to hire and retain the best workers. Research shows that younger workers are especially willing to avail themselves to online information and planning tools via web-based portals, social media, and mobile applications. But it is also useful to augment online resources with other opportunities — such as “brown-bag” lunches or small group informational sessions featuring retirement advisory experts — for learning more retirement savings options. The key for employers is to get employees interested in being proactive about planning for a secure retirement.
401(k) Plan Designs with Educational Components Create a Retirement Readiness Win-Win
Investing the time in developing a defined-contribution retirement plan that takes advantage of the latest best practices is an important step toward becoming an “employer of choice.” Even if your company already offers a 401(k) plan, now is a good time for a plan “check-up” in which sponsors and advisors review the investment options not only with respect to fees and expenses, but also to what may be most appealing to those employees you need to attract and retain into the future. In the view of retirement experts, a detailed assessment can help you achieve the right balance of cost efficiency, reduced fiduciary risks, and competitive retirement benefits. Going one step further to provide employees with useful information about effective long-term financial planning in general, as well as your retirement plan in particular, can create a model retirement readiness win-win for your business and your employees.
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