In theory, we all know that one day we won’t be able to work at the level we do today because our minds or bodies will tell us that it’s time to quit. If we all know that eventually we’ll reach this point, then why don’t we see every employee planning for that day? Sometimes it’s just a matter of motivation, understanding and relevance for employees.
Here are some ways that you can increase 401(k) participation and contribution levels at your company:
1.) Conduct fun, simple, engaging trainings periodically. Investments and financials can be intimidating to employees and as a result, they can choose to simply avoid the benefit completely. Take time to work with your 401(k) plan administrator to develop content for 401(k) meetings that simplifies the plan and shows why this benefit is relevant. Have a third-party lead the trainings so they can create rapport with your staff. Trust is big when you are talking about employees’ money. Don’t let the trainer get lost in the financial details and investments. Keep these meetings simple. Encourage complicated investment questions be asked one-on-one after the meeting.
2.) Create ongoing, self-learning tools for employees to reference. These videos can be reviewed on their own and during their initial new hire orientation. Ensure that these short, simple 5-10 minute videos answer common questions about 401(k) plans. Show examples for how to enroll, how savings can grow, and how the plan administrator can help them.
3.) Consider offering auto-enrollment and auto-increase features with your plan. You will want to talk to your plan administrator to see if these options will work for your employees, but since many times people just forget to enroll or aren’t sure where to start, these features can be a great way to increase participation. Start simple and low with auto-enrollment or increase options. If people feel like the plan is a financial burden they will opt out. You want deductions to be low enough for them to not miss the money while still giving them the opportunity to save for long-term needs.
4.) Don’t underestimate the importance of a match. Matching contributions for employees at any level can help their money accumulate. It shows employees that the employer is concerned about their future. Employer matching can be the influencing factor that causes employees to participate.
5.) Celebrate retirements. When people retire, celebrate that retirement. This celebration and the subsequent conversations around retirement will help other employees think about their retirement and long-term financial plans. Since employees are naturally more receptive to ideas from coworkers, this celebration could be the motivator that causes them to get serious about their 401(k) participation and contributions.
Take time to consider what combination of resources, incentives and activities might be best for your population. Don’t let employees get stuck in the mire of confusion and intimidation with the 401(k). Equip them to be ready for their own retirement.