TRENDS IN ENROLLMENT + RETIREMENT READINESS
Retirement Readiness is among the top concerns of many Americans. Most advisors agree that we should be saving between 10% and 15% of our annual earnings in order to have adequate income in retirement but many are falling short of this target. As a sponsor of a workplace retirement plan, you are providing your employees a valuable tool that encourages healthy retirement savings habits. How can you design your Plan’s enrollment features to encourage employees to meet their retirement savings goals?
First, consider immediate eligibility or liberal eligibility requirements that allow employees the opportunity to begin saving as soon as they are hired. The power of interest compounding is one of the greatest factors in the level of savings available to us at retirement – the sooner we begin saving, the better.
Second, consider an auto enrollment features that defaults employees into participating automatically. Studies have shown that auto enrollment significantly increases employee participation rates in workplace retirement plans. In addition, if your Plan provides a matching contribution, consider auto-enrolling employees at the level that provides them the full employer matching contribution. Finally, auto escalation is a plan feature which ensures employees are automatically participating at increased levels over time.
If you would like to review the enrollment options available in your Plan, contact your Plan Consultant today.