The secret to getting employees to save more for retirement? Auto enroll them into your plans

When employees reach their retirement age, they're often not thinking about the trips they'll take or the beach-front condo they'll buy. Instead, they're probably wishing, I should have saved more! 

Forty-one percent of employees regret not saving sooner for their retirement, and an additional 39% wish they had more saved in their accounts, according to research from Principal, an investment management company. Yet employers have the power to help employees get started as soon as they begin their work tenure by incorporating automatic savings features into their retirement plans. 

Auto-enrollment and automatic escalation can help employees invest their money with little effort, says Joleen Workman, VP of customer care for retirement solutions at Principal. Their data found that 81% of employees said auto-enrollment helped them save sooner than they would have otherwise. 

"When an individual is first eligible to participate in a retirement plan, they may think it's unaffordable, because they just graduated and have debt, or they have large rent payments and other bills," Workman says. "But with automatic features, they're automatically enrolled and then if there's an escalation, it continues to increase their savings rate. Now they're not regretting not saving." 

Read more: SECURE Act 2.0 will make retirement savings automatic — how employers can prepare 

Currently, 62% of employers automatically enroll their workers into a workplace retirement plan, according to data from the Plan Sponsor Council of America. For plans with auto-enrollment and auto-escalation features, Workman says a best practice is to enroll employees at a rate of 6%, increased yearly by 1% until they reach a 10% contribution rate. 

The benefits of auto features go beyond just a dollar amount, Workman says. When employees have a strong financial foundation, their well-being approves across the board. Employees are more productive, and employers could even save money on healthcare and productivity costs well into the future. 

"Financial stress has a significant impact on productivity, and when individuals aren't distressed, obviously, they're more productive," Workman says. "Helping employees retire when they want to retire benefits the plan sponsor as well, because as individuals get older, they may be less healthy and not want to work, which can also have implications on productivity." 

Read more: HR 101: Vanguard's tips for helping employees catch up on retirement savings 

If employers don't have auto features set up now, they should prioritize working with their plan sponsor or adviser to establish them, along with taking advantage of other financial wellness benefits. Principal uses an employee assessment tool to tailor financial wellness support to employees' needs, like budget planning, debt repayment or even estate planning support. 

The most important thing for employers to recognize is that each individual's situation is unique, and creating a secure financial plan for the future may mean helping them start from square one first. 

"There's no one-size-fits-all," Workman says. "That might mean for some individuals, 'I need help budgeting. I'm not sure that I can afford to save for retirement right now, given my student debt, how might I think about finding the right balance?' So how can we help provide that service for you? Plan sponsors have tools that are available to meet them where they are." 

Employees need to know they're not alone on their journey to financial wellness and building a robust retirement account. Workman encourages employers to acknowledge the influence they can have on an employee's financial life. 

"Employers play such a huge role when it comes to helping their employees prepare for retirement," she says. "We have more opportunity than ever given the tools and capabilities to really help them take action."