Educating your employees about the value associated with establishing their retirement nest egg early in their careers can be an enjoyable conversation. After all, who doesn’t want to talk about the effects compound interest can have on one’s retirement account balance?! Actually convincing your employees to part with a portion of their paycheck (regardless of how small that portion may be), on the other hand, can be a hard sell – particularly among millennials. You can overcome this challenge though by taking the time to research retirement savings facts that are more likely to resonate with your younger team members.
What’s In It For You
A large portion of Americans are not prepared for retirement. In fact, just 62 percent of Americans, according to a recent survey conducted by Capital One Investing, say they feel confident they will retire comfortably, meaning 38 percent will be left to work well past retirement age to make ends meet. But you can help ease the burden of retirement savings by providing your employees with the vehicle to help them save for their golden years and the road map that will help get them to where they want to go. And, in the meantime, you can also enjoy the additional advantages awarded to businesses that feature a retirement savings plan as part of their benefits package, including:
- The Ability To Recruit Top Talent – These days, potential employees want a retirement plan as part of their benefits package and depending on how your plan is designed, it can help differentiate your company from your competition.
- Employee Productivity and Loyalty – Generally speaking, employees with sound financial strategies are more productive and the retirement plan your company offers is a key component of that strategy. When you support their strategy by making monetary investments in the future of your employees, they become better, more loyal workers and their morale improves.
- Tax Credits and Incentives – When you provide your employees with a retirement plan, the government provides your business with some excellent benefits in return. According to the IRS, employer contributions are tax-deductible, assets in the plan grow tax-free, flexible plan options are available and tax credits and other incentives for starting a plan may be available to help reduce the costs associated with offering some types of retirement plans to your employees. This is a useful way to have a positive impact on the finances.
Millennials Are Looking For Help
The bad news is that millennials are not adequately preparing themselves for a secure financial future. The good news, however, is that this is a great opportunity for employers to step up and point them in the right direction. Recent findings from a study conducted by J.P. Morgan reveal that “despite their generally accepted reputation as self-assured and independent, those under 30 are more likely than those 30 and over to classify themselves as ‘do it for me’ investors (69% vs. 56%).” So while you may consider millennials to be the generation that doesn’t care about retirement planning, the fact is that most millennials are actually looking to their employers for help.
When designing a plan that will encourage your younger team members to start saving, consider the following tips:
- Keep It All About Them – Millennials embrace simplicity. With that in mind, try catering your services to meet their needs and remember that selling them on the “why” is just as important to them as the “how.” Communication and transparency are essential when working with millennials. So be prepared with plenty of information about your plan laid out in a way that’s simplistic and easily digestible. Not only will the millennial audience find this information more informative and trustworthy, it will encourage them to ask questions and get more involved in their savings strategy.
- Offer Digital Solutions – It’s time for plan sponsors to go digital. Seamless integration across a variety of platforms, complete with mobile accessibility and planning capability are key to engaging with your millennial audience. Providing them with online access to their plan helps put them in the driver’s seat while the customizable options often featured as part of the digital experience gives them a sense of individuality.
- Automate Contributions – Studies continue to indicate that those younger than 30 are the “strongest proponents of the automatic 401(k),” which makes sense when you combine that point with the fact that they prefer to leave the technical details for the professionals to decode and decipher. When you incorporate automatic plan features, qualified default investment alternatives and re-enrollment options into your plan, your plan becomes more desirable to your younger team members. Remember, millennials are all about simplicity and retirement plans don’t get much easier than a plan with features that “automate and simplify employee retirement-related decisions while leaving the ultimate choice in participants’ hands.”
Implementing these guidelines to your retirement planning process will encourage millennials to actively participate in your company’s plan, which will ultimately strengthen your own business in the process.
Email Rea & Associates to find out how you can design a plan that will encourage more millennials to save for retirement.
By Angie Isakson, QKA (Dublin office)