October 4, 2018 – Are you getting all you can out of your company’s 401(k) plan?
Through previous blogs in this four-part Retire-ability series, we’ve looked at ways to increase employee productivity and your company’s profitability through retire-ability best practices tied to your company’s 401(k) plan.
The two top goals of retire-ability are to help employees:
- Retire on time (thus saving employers the higher salary and benefits costs of employees who work past retirement age) and
- Achieve a firmer financial footing today (thus reducing the financial stress that can distract employees from in their jobs).
The three best practices we’ve examined to achieve retire-ability:
- Offering broad financial education,
- Designing 401(k) plans to increase retirement savings, and
- Making it easy to invest properly for retirement.
Now let’s look at ways to get all you can from your company’s 401(k) plan by making retire-ability part of your company mission and message!
Start at the top.
- Share this message with your company’s leadership: Financial fitness and the ability to retire on time result in greater productivity and lower cost.
- Share these statistics: when employees are stressed about finances, they bring it to work with half of financially stressed employees spending 3 hours or more during the work week addressing personal financial issues . . . and when employees work past their normal retirement age, company salary and benefit costs are higher.
- Share the best practices solutions.
With leadership on your side, seek 401(k) providers that will help you implement the retire-ability best practices. Look for advisors who offer broad financial education, who understand how to help you design your 401(k) plan to bolster employee participation and savings, and who offer better plan investments. That includes professionally managed investments accompanied by individual guidance for participants. As you interview advisors, assess their understanding of your goals and their ability to achieve them.
With the support of company leadership and best practices implemented, take your message to company managers and show them how to “talk the talk” with those they manage. Give them the tools they need to communicate. Show them how to access the broad financial education provided by your company’s 401(k) provider. Help them understand that significant savings are needed for retirement and suggest strategies employees can use to set savings goals and increase savings over time. Brief them on the 401(k) website tools that allow employees to assess their own retirement readiness and adopt positive saving practices. Remind them to encourage participants to call the 401(k) plan advisor.
Finally, integrate retire-ability information with other company benefits communications. Are you sending out an open enrollment notice for the company health plan? Broaden your message to address your company’s concern about all aspects of employee health as you remind them of financial education and the importance of saving for retirement. Do you have a yearly benefits fair? Make sure your 401(k) advisor or service provider is present to speak to employees and display helpful information on financial and retirement planning tools. Additionally, schedule individual notices throughout the year to remind them of these resources.
Retire-ability is not just a benefit for employees. It’s a benefit to your company. Working with company leadership, hiring the right 401(k) service providers, employing best practices and communicating regularly about retire-ability issues will help you get the most out of your company 401(k) plan!
Written by Laurie C. Wieder, PPC®, Vice President, Alliant Wealth Advisors Qualified Plans Division
This blog is written to help make the lives of plan sponsors easier in the process of meeting legal requirements under ERISA for their defined contribution plans. Please understand that reading this blog should not alone take the place of a one-on-one consultation regarding the needs of your specific plan, and hence cannot be a guarantee again fiduciary breaches.