When the Transamerica Center for Retirement StudiesR surveyed a nationally representative sample of unemployed and underemployed individuals, they found that 36% had used retirement monies to pay for basic living expenses. (Read the full report here.)
In that same Transamerica study, only 38% of respondents said they felt confident they’d be able to retire in comfort.
As a business owner or leader you may be thinking, “Interesting, but what’s that got to do with me? My company offers a retirement plan, but once employees leave the company we can’t tell them what to do with their money, and it’s not our problem anyway.”
Well, yes and no.
According to the 2013 Retirement Confidence Survey, only 13% of employed workers feel “very confident” about their retirement plans, while 38% reported feeling “somewhat confident.”
Believe it or not, this overall lack of confidence could have a direct impact on your business operations, as it affects both current employees and new employees entering your organization after a period of unemployment or underemployment.
A study published this past January by the Conference Board revealed that 62% of workers between the ages of 45 and 60 intend to delay their retirement plans. Meanwhile, the Millennials in your employ are chomping at the bit, waiting for job opportunities and promotions they fear may never come, even as members of Generation X continue to wait patiently (or perhaps not so patiently) to step into the leadership positions they’ve prepared for all these years. Can you spell c-o-n-f-l-i-c-t? Also, how do you keep employees engaged and motivated when their chances for advancement are slim to none?
Finally, it’s a mistake to think that worries about future retirement aren’t relevant to the here and now. It’s possible that the employee who believes he can’t save money for retirement is experiencing some financial concern that might be affecting his ability to performance at his best today.
When surveyed by the Society for Human Resource Management (SHRM), 83% of HR professionals said that personal financial problems impacted worker performance, affecting employees’ ability to focus on work (47%) and increasing general stress (46%).
Aside from all that, what are your goals in offering a retirement plan? Naturally you want to attract and retain employees, but wouldn’t it be neat if the accounts were actually available for your employees at retirement?
Here are some things you can do to help.
- Never stop marketing your plan. Make sure employees know the plan benefits and features and that they understand retirement planning is for anyone who doesn’t want to work forever—which is just about everyone.
- Provide a financial education program. The SHRM survey mentioned earlier also revealed that just a little over half of employers offer financial education programs, which is a shame. These programs don’t have to be expensive or particularly time intensive if you leverage existing relationships with your retirement plan advisors, bankers, credit union representatives, and community member organizations, such as your local chapter of the American Institute of CPAs (AICPA). These folks will love talking to your employees, and your employees will love you for allowing it. You might even get nominated for a “Best Place to Work” award.
- Make your plan easy to join, and adopt features (such as negative enrollment and automatic escalation) that make it convenient for your employees to save.
- Design your retirement plan so that it discourages employees from taking loans and early withdrawals. Be careful to take a balanced approach, however, as you don’t want to deter employees from joining the plan.
- Provide counseling and transition assistance to laid-off workers.
As an employer, you’re in a great position to help your employees with their retirement goals (and to help them realize they need goals). Taking advantage of that position means your employees will thank you now and later.