Total Rewards Programs Key to Recruiting & Retaining Top Talent

Total rewards programs are a vital part of workplace culture, employee performance and securing top talent. Learn how program enhancements can help meet the demands of a changing workplace and workforce.

 

Plan sponsors are often faced with a balancing act of what benefits to offer versus what employees actually value the most. To develop the best program, many look to a total rewards approach, which provides a holistic look at compensation plus the “hidden paycheck” of benefits and wellness and/or education programs to empower employees.

5 Main Components

The main components of a total rewards program generally include the following:

  • Compensation: Normally the base pay received by an employee is often the entry point for the overall employment package. This can be the baseline of how an employee sees their worth and value at the company. Compensation, along with regular pay raises, help an organization motivate employees and improve business productivity and effectiveness.
  • Benefits: The term “benefits” covers a wide range of perks available to employees. Some are considered bedrock benefits, while others fringe. But to boil it down, benefits are essential for recruiting and retention efforts. In fact, nearly 7 out of 10 employees say their benefits package is the reason they stay at their job.[1] Your benefits package should reflect the specific needs of your company and may include some of these most popular options:
    • Insurance Benefits: Medical Insurance, Dental/Vision Insurance, Telehealth, Mental Health Support
    • Financial Benefits: Retirement Plan, Financial Wellness, Student Loan Repayment, Emergency Savings Fund
    • Paid Time Off: Sick Leave, Flex/Vacation Time, Parental Leave

 

  • Work-life Balance: The effect of the COVID-19 pandemic on employers and employees was deeply felt, and yet, it highlighted the need for work-life benefits to become flexible and evolve. Several work-life features were ranked as extremely or very important by employees, including flexible work schedules (83%), leave of absence options (83%) and family-friendly work environments (76%).[2] The pandemic caused many employers to revisit and revise their employee benefits last year and expand them to support employees who needed more remote work options, flexibility to care for family members and more ways to protect their physical and mental health. Employer ingenuity to address these needs further shows a commitment to their employees’ overall well-being.[3]
  • Learning and Development: While educational training sessions can take employees away from their primary work, the intellectual capital gained from the practice are plentiful. Not only can these sessions contribute to employee morale and knowledge, but they also help to enhance efficiencies in one’s job, which can result in improvements to the company’s bottom line.
  • Performance and Recognition: Appreciation of employees’ actions can be monetary but also go beyond their paychecks. Recognition can increase employee self-worth and productivity, while it also highlights their value within a team as well as the company.

Total Rewards in 4 Steps

There are four primary steps to develop and maintain a total rewards program according to SHRM, the human resources non-profit:[4]

  1. Assessment of current benefits and compensation system to determine program effectiveness can involve surveying employees to gain opinions on pay, benefits and opportunities for growth and development, as well as examining current policies and practices. A summary of recommendations and solutions should be the desired outcome.
  2. The design of the total rewards program should involve senior management to identify and analyze various reward strategies, while determining what would work best in their workplace.
  3. HR departments implement and execute a rewards system. Employee communication and training is also necessary to measure relevant variables.
  4. Total rewards program effectiveness must be regularly evaluated with the results communicated to company decision makers. Based on these reviews, modifications can be proposed and implemented.

Build It and They Will Come 

Total rewards programs are critical for the workplace culture, employee performance and overall recruiting of top talent. And, as the workforce changes or becomes even more competitive, it’s important to evaluate, adjust and enhance your employee benefit package to remain competitive and continue to recruit and engage top talent.

We can help. Retirement plans and what they include are a valued benefit in the total rewards mix for job-seekers and employees alike.  We are dedicated to helping our clients develop plans that fit the needs of the business owner, focus on company goals and help employees feel confident in their financial future.

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

www.alliant401k.com

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

 

[1] Ameritas. “What Benefits Do Employees Value Most?” April 2021.

[2] Miller, Stephen. “SHRM Benefits Survey Finds Renewed Focus on Employee Well-Being.” SHRM.org. Sept. 2021.

[3] Miller, Stephen. “SHRM Benefits Survey Finds Renewed Focus on Employee Well-Being.” SHRM.org. Sept. 2021.

[4] SHRM.org. “What are total rewards strategies? Can you give me some idea on how to develop a total rewards strategy?” 2022.

How Could Inflation Impact Corporate Retirement Plans?

Increasing prices may put pressure on employers and delay workers from retiring 

 

Inflation is the increase in the general price of goods and services, which can decrease the purchasing power of American workers. So how does this recent upward trend affect your workplace benefits, employees and retirement plan?

Salaries, Flexibility and Savings

When inflation goes up, the same paycheck doesn’t stretch as far. With the increased costs of food & beverage, transportation, housing, apparel, medical care, recreation, education & communication and other goods & services, your employees might not be able to afford the same lifestyle.

To maintain a similar standard of living, your employees may request salary increases and it might be more than the typical 2% raise (year-to-date salary increases have been more than 4%).[1]

Other employers, however, are considering shortening the work week as opposed to a salary increase.[2] Benefits like flexible schedules may be appreciated more than a raise.

Another employee benefit that is gaining interest is the emergency savings account. Sixty percent of employers said they are interested in offering emergency funds and 1 out of 4 employees said they’d consider a job change if a new employer offered this benefit.[3]

Robbing Peter to Pay Paul

Increased costs may cause your employees to redirect funds designed to be saved for retirement. Whether it is reducing their current retirement deferrals and/or an increase in loan requests, it may be a way to keep up with the rise of inflation.

Delaying Retirement

Starting this year, all participants will receive a statement that includes a monthly income projection. The income illustration will be based on their retirement savings and lifetime payout assumptions. But what happens when those numbers are much lower than anticipated?

For older employees, they may feel additional savings worries, inflation stress and they could potentially delay their exit from the workforce. It is projected that 79% of older generations will react negatively to their predicted monthly retirement income.[4]

To prepare them, education is key. Emphasize the financial resources that come with your retirement plan, including our services and resources like participant infographics.

Hedging for Inflation

Companies and workers are likely to feel instability during this time of inflation-driven economic swing and may need extra support.

Here are some helpful solutions for your company’s retirement plan:

  • Explore portfolio diversification to include investments that may be correlated to inflation[5]
  • Consider a financial wellness program that educates employees on topics like inflation
  • Get creative with contributions — 70% of workers support a 3% 401(k) contribution over a salary increase[6]
  • Stay in close contact with our team to track evolving trends

 

Here are suggestions for participants of all generations to keep retirement savings on track, despite inflation:

  • Utilize budgets for each area of monthly spending
  • Prioritize where extra funds are allocated
  • Promote healthy savings habits because 9/10 employees believe their workplace retirement plan is one of the most important benefits[7]
  • Speak with a financial advisor to review current investments and goals

On the Horizon

To calm inflation fears, employers can provide financial wellness resources to help employees focus on their long-term financial objectives, which in turn can also improve retention rates and onboarding new hires.

Other benefits to consider include flexible work arrangements, remote work options, additional sick time and/or access to emergency savings so employees can concentrate on the present.

Inflation, unfortunately, is a part of our society and most likely will be a factor for the foreseeable future. Whether it’s high or low, a best practice is to continually explore ways of improving and protecting plan assets for your retirement plan and its participants.

How We Can Help

Employers, contact us to discuss how your plan can meet business goals and motivate employees to save more for retirement.

Reach out to us today to explore opportunities.

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

www.alliant401k.com

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

 

[1] Kropp, Brian, and Emily Rose McRae. “11 Trends That Will Shape Work in 2022 & Beyond.” Harvard Business Review, 13 Jan. 2022.

[2] Kropp, Brian, and Emily Rose McRae. “11 Trends That Will Shape Work in 2022 & Beyond.” Harvard Business Review, 13 Jan. 2022.

[3] Dhue, Stephanie. “No Emergency Savings? New Workplace Benefits Aim to Help.” CNBC, 7 Jan. 2022.

[4] Cohen, Josh. “Lifetime income illustrations: Preparing for participant reactions.” PGIM. Summer 2021.

[5] Chalk, Steff. “Retirement Planning Trends on the Horizon for 2022.” 401kTV.com , 15 Dec. 2021.

[6] American Century Investments. “8th Annual Survey of Retirement Plan Participants.” 2020.

[7] American Century Investments. “8th Annual Survey of Retirement Plan Participants.” 2020.

Guide to Paying Down Student Loans

 

Help your employees find ways to manage their student debt with:

  • Refinancing options
  • Repayment plans
  • Forgiveness Programs
  • Loan Consolidation

These strategies can ease your employee’s financial headaches so they can focus on being productive in the workplace.

Download the Infographic >>

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

www.alliant401k.com

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

Employees Want Paychecks for Life: Pros and Cons of Guaranteed Lifetime Income

Annuities and similar products may help address retirement readiness in an aging workforce

 

People are living longer, which means they may need their retirement savings to last decades. As a result, nearly half (48%) of participants are concerned about outliving their retirement savings.[1] Many Americans don’t know how to transform their savings into retirement income.

Guaranteed income offerings can help ease this concern by providing consistent, predictable payments for life. Research shows a majority of 401(k) participants (75%) are “very” or “somewhat” interested in putting some or all of their savings into a guaranteed income option.[2]

Employers are on board, too — 4 in 5 believe employees want guaranteed income products in their retirement plans.[3] However, with new retirement strategies come opportunities, uncertainty and risks. Here are some of the benefits and risks of in-plan guaranteed income.

What is Guaranteed Lifetime Income?

Think of it as a “paycheck for life.” Essentially, it is a retirement income strategy guaranteed every month once a 401(k) participant reaches retirement (generally speaking at 65 years old). These investment solutions are gaining in popularity because they are easy for employees to understand, which helps instill more confidence in their retirement outlook.

Retirement Income Hurdles

For decades, workplace plans have helped workers save, invest and accumulate as much as possible. Yet, few plans offered a decumulation strategy to provide a steady, predictable flow of retirement income.

Guaranteed income solutions aim to solve three primary participant concerns:

  1. Running out of money: The average American retiree could potentially outlive their savings by nearly 10 years.[4] Guaranteed income products help address this risk by delivering a steady, predictable lifetime income stream.
  2. Reducing or eliminating early withdrawals: Taxes and penalties alone may not discourage participants from tapping into their retirement savings early.
    Guaranteed income products may be a deterrent, as pre-retirement withdrawals will notably reduce retirement income.
  3. Lacking flexibility: Guaranteed income options can be tailored to an individual’s needs, from the type of product to the way they receive payments, who is covered and for how long.

Key Benefits and Risks

As with any investment solution that has various pros and cons, guaranteed lifetime income is no different.

Potential advantages include:

  • Increased retirement confidence because participants can more readily project their anticipated retirement income which can help them retire on time.
  • Enhanced motivation and desire to save because participants will know their real monthly payouts, which may prompt them to save more proactively to reach their goals.
  • Reduced employer healthcare costs since older employees may retire earlier and, thus, exit the health insurance plan.
  • Improved competitiveness in recruiting and retention.

Disadvantages include:

  • Each guaranteed income contract is different, and the terms need to be clearly understood.
  • Contracts may not be ported (moved from one employer to the next).
  • Participants must elect guaranteed income far in advance of retirement; this decision typically cannot be reversed.
  • Payouts may end when the participant dies.
  • Participants may incur additional costs.

 

Your Fiduciary Role

The SECURE Act and pending SECURE Act 2.0 were designed to help Americans save for retirement; and while the law and pending update seek to improve our retirement system, it can be hard to decode.

To boil it down, selecting a guaranteed income provider is still considered a fiduciary duty, so this should be done with care and diligence. Contact us for support.

Lifetime Income Illustrations

Another SECURE Act requirement goes into effect this year; lifetime income illustrations will begin appearing on participant statements. These projections may motivate your employees to save, or they could instill a sense of dread if the illustration paints a bleak picture. Either way, this may prompt some employees to knock on your door and ask questions about the company’s retirement plan.

How We Can Help

If you are curious about guaranteed income options or other ways to enhance your retirement plan, we can help. Whether you need plan assistance or help getting your employees on track toward retirement, we support our clients through every step of the journey.

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

www.alliant401k.com

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

 

[1] Nationwide Retirement Institute. “2021 In-Plan Lifetime Income survey.” Sept. 2021.

[2] Employee Benefit Research Institute. “2021 Retirement Confidence Survey.” June 2021.

[3] Nationwide Retirement Institute. “2021 In-Plan Lifetime Income survey.” Sept. 2021.

[4] World Economic Forum. “Investing in (and for) Our Future.” June 2019.

Video – Get to Know Your Retirement Plan Committee

If you think you’re alone in managing your 401(k) plan, think again! A Retirement Plan Committee is a dedicated group that manages investment options, oversees retirement plan administration and provides fiduciary oversight and accountability.

In this two-minute video, learn who should be on your committee, how to formalize your team, how to oversee your plan and how a financial advisor can help!

Watch the Video

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

Live Your Best Life: Now and In Retirement

Americans are living longer than ever before. Life expectancy is now at 79 years old, and many employees will need to save enough to live 17+ years in retirement.1 How financially prepared are your employees to enter into this next stage of life?

Saving more today can make a huge difference. Share this questionnaire with your employees so they can picture their retirement lifestyle and determine if they should be saving more today to live the future they desire.

Download the Questionnaire

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

Who’s on Your Retirement Plan Committee?

Retirement plan committees are super important; they set the direction and priorities of the company’s retirement plan. These actions (or inactions) can have a huge impact on how successful employees are at preparing for retirement.

For some plan sponsors, overseeing an organization’s retirement plan can be an overwhelming and taxing exercise. Many companies recognize this and choose to establish groups to manage and make decisions about this important employee benefit. Retirement plan committees play an integral part of managing investment options for plan participants, providing fiduciary oversight and working toward the goal of plan success.

 

Who Needs a Retirement Plan Committee?

Although retirement plan committees aren’t a legal requirement, establishing one allows for a designated group to be tasked with plan management, investment decision-making and fiduciary responsibility.

A retirement committee’s collective expertise can also better address the increasing complexity of governing rules and regulations that primarily stem from the Employee Retirement Income Security Act (ERISA), which sets the minimum plan governance standards to provide protection for participants.[1]

Understanding Fiduciary Duty

A plan fiduciary must always act solely in the interest of the participants, although there is some confusion about who exactly the fiduciaries are. According to one study, nearly 1 out of 3 plan sponsors do not see themselves as plan fiduciaries,[2] which is a big problem since a plan fiduciary can be held personally liable for restoring any losses to the plan.

Retirement plan fiduciaries are either named in the plan document or considered as such based on the activities they perform. The primary responsibilities of fiduciaries are the:

  1. Duty to act prudently with the care, skill, prudence and diligence under the circumstances that a person acting in a like capacity and familiar with such matters would use.
  2. Duty of loyalty to manage the plan solely in the interest of participants and beneficiaries.
  3. Duty to diversify the plan’s investment options to minimize the risk of large losses.
  4. Duty to follow plan documents to the extent that the plan terms are consistent with ERISA (rules and regulations that govern retirement plans).

Additionally, plan fiduciaries should avoid any conflicts of interest.[3],[4]

 

Structuring a Retirement Plan Committee

Financial advisors can play a vital role in helping plan sponsors establish and maintain a retirement plan committee. In addition to providing financial investment expertise, they may give operational insight for the committee and recommend experts outside the company for additional support.

A financial advisor may also provide education and guidance regarding fiduciary best practices, regardless of the size of your investment committee.

For many companies, the retirement plan committee will include the plan administrator, members from the company who have financial or benefits responsibility and additional members who provide needed experience.

Lawyers with ERISA expertise can help committees navigate regulation changes that affect retirement plans as well as provide protection from litigation exposure; approximately two-thirds of organizations that have legal counsel participate in committee meetings. However, only half of organizations with fewer than 1,000 plan participants have legal counsel, in contrast to the nearly 92% of organizations with more than 5,000 participants.[5]

Legal expertise is particularly necessary as in recent years, retirement plans have experienced an uptick in legal challenges. In 2020 alone, there was a fivefold increase from the previous year in class action lawsuits challenging 401(k) plan fees.[6]

Other committee members may include third party administrators (TPAs) to provide guidance on plan compliance, administration and related areas; recordkeepers that track plan participants, as well as investment and financial activity; and the company’s accountant for bookkeeping oversight.

Setting a meeting schedule is dependent on the size and complexity of the plan. Many retirement committees meet quarterly, but nearly 40 percent of small organizations meet semi-annually.[7]

Duties of a Retirement Plan Committee

After a retirement plan committee has been organized, a governing document is established to outline the responsibilities, procedures and processes to follow. Creating an investment policy statement is another key step that will help align the plan’s objectives and investment approach.[8]

The committee should consistently monitor the plan’s investment performance against benchmarks and also review adherence to compliance processes.

In the 401(k) world, the process that led to your decision may be more critical than the decision itself. Documenting everything from committee meeting discussions to the rationale behind service provider selections to investment policies are all equally important.

Consistent employee communication is a cornerstone of any committee’s duty and should cover at a minimum, enrollment periods, contribution limits and matches and plan information and fees.

The success of a retirement plan committee can have a much greater impact than what meets the eye. While it may seem like an administrative obligation, the reality is that the members’ efforts are actually playing an active role in helping fellow employees pursue their retirement goals.

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

Alliant Wealth Advisors offers this blog to provide valuable insights to retirement plan sponsors.  For more than a decade, we have helped employers from diverse business sectors offer their employees a better retirement plan.  We guide sponsors in all plan areas, tailoring our service to each company’s unique needs.

Laurie Wieder, Vice President – Institutional Retirement Plan Specialist at Alliant Wealth Advisors, is available to discuss your thoughts about the content of this blog . . . or any other 401(k) plan issue. Laurie backs her expertise as a retirement plan specialist with more than 30 years of experience as a consultant, business owner and organization executive.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

[1]  Department of Labor. “Employment Retirement Income Security Act.” DOL.gov.

[2]  AllianceBernstein. “Inside the Minds of Plan Sponsors: Fiduciary Awareness on the Rise.” alliancebernstein.com. 2020.

[3]  Department of Labor. “Fiduciary Responsibilities.” DOL.gov.

[4]  TIAA. “What it Means to be a Retirement Plan Fiduciary.” TIAA.org. 2020.

[5] PSCA. “Retirement Plan Committees.” PSCA.org. April 2021.

[6] “Bloomberg Law. “401(k) Fee Suits Flood Courts, Set for Fivefold Jump in 2020.” Bloomberglaw.com. August 2020.

[7] PSCA. “Retirement Plan Committees.” PSCA.org. April 2021.

[8] TIAA. “What it Means to be a Retirement Plan Fiduciary.” TIAA.org. 2020.

Year End Wrap-up: Evaluating Your Company’s Retirement Plan

With Cycle 3 deadlines fast approaching, now is a great time to review your retirement plan. Measuring your retirement plan’s data provides key information to help increase its competitiveness, which can be extremely helpful in today’s labor market.

Benchmarking is a way to determine your retirement plan’s effectiveness. As relevant data is gathered, you can compare your plan to others of a similar size in your industry. Comparing your plan regularly can help identify more opportunities for improvement.

Read the Guide

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

You Can’t Talk About That at Work: Tackling Financial FAQs

Talking about money is tricky, especially at work. While it may seem too personal for work and easier to avoid the conversation, the effects can have a lasting effect on a company.

 

More and more forward-thinking employers are starting to overcome the stigma that surrounds talking finances at work. They are putting to rest their fear of overstepping boundaries because employees strongly value financial guidance at work. In fact, 87% of employees want help and nearly 9 out of 10 take advantage of financial wellness services when offered.[1]

Stress Impacting the Bottom Line

It is well documented that financial stress can cause a myriad of workplace complications. Stress can have a cascading effect; for example, 4 in 10 employees experience health issues or loss of sleep due to financial stress, which in turn leads to a $400 annual increase in healthcare costs per stressed employee.[2]

Stress also has a way of consuming productivity; 3 in 10 employees admit that financial stress has impacted their job performance, and they spend three to four hours a week at work dealing with their finances.[3]  That’s 150 hours of lost productivity per stressed employee per year.  That’s a lot!

The Elephant in the Room

When companies are up against a complex problem like financial stress, how do they start attacking the problem? Well, like the saying goes, you have to eat the elephant one bite at a time, so financial guidance and education can be great ways to start combating the 5,000-pound problem.

One of the most important areas of concern for employees is retirement readiness, so employers need to emphasize communication around the topic.

Good employee communication is a must, especially letting them know there is no such thing as a “stupid” question. Emphasize that they shouldn’t be hesitant or embarrassed to ask the questions on their minds. Here are some questions employees might ask about saving, investing and planning for retirement.

Tackling Employee FAQs

Why save? First, to help you in the event of an emergency or for large-ticket items such as a house or car. It is also very important to save for retirement if your goal is to be financially secure when you’re no longer working. You don’t want to depend on Social Security for your total retirement income.

When should I start saving for retirement? Now. The sooner the better. It’s easy to see retirement as something in the future and not an important event you need to start preparing for at an early age. Additionally, if you don’t know how to start, what to invest in or understand the power of compound interest, you might feel like putting it off. Ask your 401(k) administrator if you don’t understand your plan.

What’s compound interest? Compound interest is interest paid not only on the money you’ve invested, but on the interest you’ve already earned. Because of compound interest, even small amounts become larger over time.

What’s an investment? An investment is a way of putting money aside so you can get a return on it. Investments are often thought of in terms of stocks and bonds. Your 401(k) plan has investments to put your contributions into, so take advantage of them.

What’s a stock? A stock is an investment that represents partial ownership of a company. Units of stock are called “shares”, which may pay interest and dividends to you as an owner. They’re traded on the stock market, where the price can fluctuate up and down.

What’s a bond? A bond is an investment where you lend money to a company (or a government); the borrower then pays interest until the bond matures at which time you should receive your money back.

Your 401(k) plan may have a variety of investments such as mutual funds, a type of investment in which many investors pool their money in securities like stocks, bonds, and money market instruments. It might also contain Target Date Funds, a type of investment, often consisting of mutual funds, structured to grow over a specific time frame and then become more conservative once that target date, usually at retirement, is reached. Like stocks, the value of mutual funds and target date funds can fluctuate.

Teamwork Makes the Dream Work

Speaking with a financial advisor or joining a financial wellness education session can engage and assist employees in being more financially responsible, take better advantage of their 401(k) plan and be more “present” at work.

After all, 82% of employers subscribe to the belief that it is in their company’s best interest to help employees become more financially secure. And employees tend to agree: when employers demonstrate a commitment to their financial wellness, 60% of workers say they are more dedicated, loyal and productive at work.[4] It’s a win-win situation for all!

Contact us to discuss common employees FAQs and ideas to reduce workplace financial stress that can elevate savings.

 

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

Alliant Wealth Advisors offers this blog to provide valuable insights to retirement plan sponsors.  For more than a decade, we have helped employers from diverse business sectors offer their employees a better retirement plan.  We guide sponsors in all plan areas, tailoring our service to each company’s unique needs.

Laurie Wieder, Vice President – Institutional Retirement Plan Specialist at Alliant Wealth Advisors, is available to discuss your thoughts about the content of this blog . . . or any other 401(k) plan issue. Laurie backs her expertise as a retirement plan specialist with more than 30 years of experience as a consultant, business owner and organization executive.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

[1] PwC. “PwC’s 10th Annual Employee Financial Wellness Survey.” 2021.

[2] Prudential. “Wellness Programs Earn Their Place in Human Capital Strategy.” June 2019.

[3] Prudential. “Wellness Programs Earn Their Place in Human Capital Strategy.” June 2019.

[4] Prudential. “Wellness Programs Earn Their Place in Human Capital Strategy.” June 2019.