As a plan sponsor, you know that understanding the need to save for retirement and actually taking the necessary steps to do so are two very different things. But how do you effectively communicate the importance of this to your employees? According to a survey conducted by Prudential, the most influential factor is motivation, pure and simple. If plan sponsors can improve their employees’ attitudes about saving for the future, they’ll be more likely to participate and engage in their retirement plans. In fact, the impact of motivation was found to be so significant, the effects were often long lasting.
Based on the survey sample, 80 percent of those who were highly motivated to save regularly contributed to a retirement plan, while only 58 percent of those with lower levels of motivation were committed to saving. And among those who were highly motivated, 95 percent of them expressed confidence in their growing nest egg.
The study also revealed that when employees rated their employers’ retirement plans, those who weren’t very motivated were more likely to report that the plan was complicated and difficult to understand.
And this is where the employer comes in. It’s up to you to boost your employees’ enthusiasm for contributing to a retirement plan and saving for their future. How? By doing the following:
- Keep employees engaged. To help your employees meet their retirement goals, you must make continuous efforts to keep them focused on their savings. You can do this by working to educate plan participants on the close connection between saving and the extremely beneficial goals they’ll obtain later down the road. Some of these goals might include more opportunities to spend time with others, to pursue new interests, and to continue personal growth when they’re older.
- Remove barriers. Many employees who lack the motivation to participate in retirement plans feel overwhelmed by all that the plan entails. Consider keeping them engaged by providing personalized solutions that consider their individual financial lives and needs. If they’re able to picture a retirement savings plan that meets their personal goals, they’ll be more likely to contribute to it and make it a priority.
- Make it easy. Reducing the complexity of retirement planning is one of the key ways to increase motivation, especially when considering 39 percent of the less motivated group wanted more guidance as to how to save for retirement. Employees should feel comfortable coming to you with questions to help them better understand their plans. You need to reduce the friction for choosing to participate, so employing a variety of communication opportunities such as live webinars or in-person sessions with advisors can help employees get involved.