You want your employees fully engaged with the mission of your company. For your employees to do their best work, they need to be focused. One way you can help your employees is by taking away one of the most one of their most significant worries—planning for their retirement. You don’t need to be each employee’s personal financial advisor. There are several small steps your company can take to help employees feel more comfortable and confident in their retirement savings.
The Paradox of Choice
As human beings, we claim to love choices. We want to be able to choose every detail and feature of our new car. We want the freedom to choose from thousands of different movies on our streaming services. However, research psychologists have long known the more choices we have, often, the harder time we have making decisions. When you are confronted with too many options, you are more likely to choose to do nothing rather than select one of the available options.
This is called the paradox of choice. One of the problems with planning for retirement your employees face is that there are too many options. It’s challenging to sit down with the 401(k) election instructions and make a smart financial decision. One way you can help your employees plan for retirement is to provide fewer retirement plan options. Focus on having high-quality choices instead of a large number of choices. Someone is more likely to make the best choice for them when selecting from three options than they are out of twenty options.
Employees need continuing education to sharpen their skills and to learn how to improve their job performance. They also need continuing financial education as things change in the marketplace. Another way to help your employees plan for retirement is to provide regular short seminars from financial experts. Hosting brief half-hour seminars on narrow topics will help employees feel more confident in their retirement knowledge. These short meetings will also help them take one or two steps towards securing their financial future.
Automatic Plan Features
People are never going to take the time to read all of the retirement plan literature that they receive. You can help employees better plan for their retirement by making sure the default settings of your 401(k) plan help employees maximize contributions. The closer the default setting is to the maximum employee contribution, the more likely most employees will save enough for their retirement.
Regular Retirement Checkups
Employees over age fifty have significantly different retirement plan needs than employees in their twenties. You can help your employees plan for retirement by scheduling annual retirement plan checkups. Your employees can have brief conversations with a plan administrator or financial planning expert to discuss the state of their 401(k). They can also discuss what changes, if any, they may want to make in the next year. Having employees sit down with an expert and regularly evaluate their retirement plan will help prevent them from falling too far behind in their retirement savings. Employees will also be able to make regular adjustments as market conditions or life circumstances change.
Your employee retirement plan should not just be set it and forget it. You can help improve the lives of your employees and increase their productivity and loyalty by helping your employees plan for their retirement.