Your workforce may include employees who aren't taking full advantage of your retirement plan and, therefore, may be at risk of not having enough savings to retire comfortably.
How can plan sponsors engage employees and encourage them to use their retirement plan effectively?
Below are answers to some common questions about tailoring communications to specific employee groups.
How do targeted communications encourage plan participation?
Different groups of people often have different retirement planning needs. When retirement plan communication is tailored toward a specific group, the message can be geared toward issues relevant to their situation. For example, younger employees may be more interested in receiving messages about the importance of getting an early start on saving and the power of compounding. Those nearing retirement age may be more interested in learning about the tax implications of retirement income withdrawals and the effect of inflation.
What types of employee communication groups should be considered?
It really depends on the demographics of your workforce. Grouping employees by life stages is a relatively common approach. In addition to demographics, you may want to look at retirement plan behavior. An employee’s engagement level with his or her retirement plan is an easy way to separate out what kind of retirement education to offer them and the level of frequency.
Different retirement education and communications can be classified by:
Should messages and education about retirement planning be gender-specific?
Women have a longer average life expectancy than men. They also are more likely to have stopped working at some point during their careers due to the demands of their families. Workshops, articles and other resources detailing these issues may encourage female employees to make sure they’re taking action to have sufficient income during retirement.
Should employee communications target specific cultures?
If a workplace has a significant non-English speaking population, providing bilingual plan communications and presentations that also are sensitive to specific cultural differences could help boost plan participation and contributions. For examples, visit GuideStone.org/Espanol and GuideStone.org/Korean.
Which strategies may be effective when communicating with younger employees?
Younger employees need information regarding the importance of joining their retirement plan and contributing as much as possible. Most financial planners suggest employees need to replace between 70% to 90% of their final working year’s income to maintain their standard of living after they retire. The earlier they enroll in a retirement plan, the more likely they will be to have that income available.
Additionally, communications should concentrate on how the plan works and the differences between tax-sheltered and Roth contributions, tax-deferred compounding, starting early and contributing regularly. Make sure your employees understand the difference between tax-sheltered and Roth in order to best determine which savings option is right for them. In addition to tailoring the message, also consider the medium through which employees will receive the information.
What topics will resonate with older employees?
Generally, the needs of participants who plan to retire in the next five years shift from mid-career saving and investing to decisions that will affect their retirement income strategy.
First, they may seek out the best way to gradually shift any aggressive or moderate investments to be more conservative. Additionally, they need information specific to transitioning from accumulating assets over the years to receiving those assets as retirement income. GuideStone can help your employees understand their distribution options and help them map out a withdrawal strategy during retirement which helps guard against depleting savings too quickly.
Simply put, your retirement plan greatly benefits your organization and gives your employees the unique opportunity to build future savings while also saving on taxes now. But knowing this is not enough. So, make the most of these advantages by taking time to promote your retirement plan to employees on a regular basis and remind them to take action to enhance their financial security.
As always, our priority at GuideStone is to enhance your financial security, and we’re ready to help you in every way we can. If you have any questions or would like information on how you can promote your plan effectively to employees, please call 1-888-98-GUIDE (1-888-984-8433) between 7 a.m. and 6 p.m. CT Monday–Friday or email Info@GuideStone.org.
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