Planning for retirement is not a topic employees often think about, but it’s an eventuality they will all have to face. Many employees lack the necessary know-how to get ahead of the curve when it comes to their retirement, which means HR teams may need to step in to offer the right information.
Financial security is not something that will happen overnight; it will take a substantial commitment from your employees to make sure they’re ahead of the curve. But with concerns about the financial health of the millennial generation growing, your business could be facing a race against time to plug the hole.
American workers are more secure in their retirement preparations than before the country was hit with the recession, but that doesn’t mean they’ll actually have everything in place and completely understand how leaving the workplace will affect them.
Research shows 66% of working millennials have nothing saved towards their retirement. There are several factors playing a significant role in the current minor financial crisis of this generation, including mounting student debt, increasing real estate costs, and a still recovering jobs market.
Additional information coming from my company’s survey of AWS IT specialists shows that at least among this group of tech workers, they would be more influenced to take a job by a bonus (45%), flexible hours (38%) and the ability to work remotely (35%) than by a retirement savings plan (30%).
With retirement still far off for today’s millennial workers, saving is not a priority. But those who start now are much more likely to be secure when the day to retire does come. With that in mind, the right education and advice is a necessity to help them look towards the future.
As a business, it pays for your staff to prepare for when they retire, regardless of their age range. Experts estimate individuals will need 70-90% of their pre-retirement earnings to have the same standard of living as when they were employed. However, few Americans are aware of the exact amount they’ll need accounts in order to keep living the lives to which they are accustomed.
Despite the millennial generation operating in some of the most highly paid jobs on the market, along with having an increased amount of disposable income available, they’re less likely to add that to a savings account.
Employees need to understand the impact of inadequate financial security. By educating new and current employees about their benefits and especially helping improve their financial literacy you’ll be making a difference in how they manage their money and plan for the future. You’ll also help reduce the stress from financial concerns, which is a growing problem for US employers.
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If your business already has a 401(k) plan in place, actively encourage your new employees to become part of it. During the early part of the economic recovery, having staff maintain their contributions seemed less of a concern. Now, however, 81% of workers like the idea of being automatically enrolled in the company’s 401(k). Yet only a small number of businesses offer that.
By automatically enrolling your workers into your defined contribution plan makes saving for retirement easy and, if your company has a match, keeps them from missing out on growing their savings even faster.
You might also invite speakers to come in for “lunch and learns” about other financial options your employees should know about, such as Social Security benefits and Individual Retirement Accounts (IRA).
For workers nearing retirement, consider offering a flexible work arrangement. While flexible schedules and remote work can play a big part in attracting and retaining staff of all ages, for older workers, this can be a way of allowing them to ease into retirement without you losing their knowledge and skill all at one.
The age range for retirement is continually shifting, and offering your teams the chance to reduce their hours or move to a less demanding position can help them better prepare.
Providing workers the essential benefits should be just the beginning. Enhance their financial wellness and to help them better navigate the economic ups and downs they may face in the future.