Retirement done right means financial freedom in the golden years, but for employees who didn't start saving early or find their finances coming up short, living comfortably can seem out of reach.
The events of recent years have put strain on retirement accounts, whether caused by career and job changes or the impact of a troubled economy. According to the Bureau of Labor and Statistics, this year's private industry retirement access through employers was 69%, but only 52% of workers were participating. Though this number is going up and likely to increase with the anticipated passing of the
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"Right now there's high inflation and concern about a potential recession," says Dave Stinnett, head of strategic retirement consulting at Vanguard. "In contrast to that, we are seeing participation rates in 401(k) plans increasing and we're getting much better retirement scores for plans than we have in the past."
To best capitalize on employee interest, employers should prioritize education, Stinnett says. Encouraging simple savings steps within a workforce, or directing employees to outside expert advice, can fast-track savings progress.
"Basic tasks such as creating a budget and establishing an emergency savings account are important to address," Stinnett says. "Once they have these, many people are in a much better place emotionally to start participating in a
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Stinnett's straightforward messaging for a retirement strategy presents good options for savers of every age, and is something employers can reiterate as employees choose which plan they would like to put in place.
"There are mechanisms that allow one who is late to the game to save adequately," he says. "What we try to anchor people around is a 75% income replacement ratio in retirement. You can do that if you save 12-15% in your plan. If you haven't had the luxury of starting to save at a very young age, then you want to make sure you're participating at a savings rate that captures the full employee match level."
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Likewise, these numbers are something organizations should consider when evaluating their 401(k) match offering. Financial wellness as a whole has become increasingly popular among employees, and employers are finding that recruitment and
"Retirement is right at the top of the list of benefits employees want," says Stinnett. "Many people are seeking a place to work or changing jobs, and they often hone in on the quality of the retirement benefit – the generosity of the company's match. If there is financial advice to avail themselves of as well, it's a very important part of a person's net worth over the course of your working time."
