How can you help employees save for retirement? Here are a few ways to teach them to use their benefits effectively so they can reach their goals.

With Americans living longer than ever, it's no wonder workers are worried about whether their savings will last. That's why 57 percent plan on delaying retirement to save more money.

Employers need to do more to help employees save for retirement so they have other options besides delaying retirement.

The Problem With Delaying Retirement

Thirty-eight percent of workers don't plan on retiring until they are 70 or older. But when you look at statistics for older Americans, this is just not realistic.

Nearly half of retirees stopped working before they turned 65, for example, and many could not control when they left the workforce. Top reasons for retiring early included disability, losing their job without finding another one and needing to care for a spouse or other family member.

While some of your employees may be able to delay retirement to earn more, others will not have that option. As a result, you need to help employees save for retirement now since they may not be able to make up lost ground later.

Using Workplace Retirement Plans

Offering a workplace retirement plan is one of the best ways to help employees reach their retirement goals. If you offer a 401(k) or similar plan, employees can deduct money straight from their paychecks while receiving a tax deduction for their contributions.

A low-cost way to improve a workplace retirement plan is to automatically enroll employees to contribute part of their paycheck into the plan, rather than requiring employees to sign up to contribute manually. This means that if an employee does not want to contribute, they must manually opt out. The Department of Labor promotes automatic enrollment as a way to increase the number of employees who use your plan. And if you have the funds, offer a matching contribution to boost the amount of money that goes into your employees' retirement accounts.

Finally, review your plan's investments regularly to make sure that the fees are competitive and that the investment strategy matches your employees' goals.

Promoting HSAs for Retirement

Health care will likely be the biggest cost for your employees during retirement, as the average healthy 65-year-old couple will pay close to $321,000 during retirement on health care, according to ADP's "Challenge for Americans: Saving For Health Care Costs in Retirement" report.

If you offer a health savings account (HSA), let employees know they can use their HSA savings after they retire. Employees get a tax deduction for adding money into these plans, and withdrawals are tax-free when they're spent on health care expenses, including retirement health care expenses like the future cost of Medicare parts A, B and D, copays, prescriptions and other eligible health needs.

If an employee doesn't spend all their HSA money on medical expenses, they can start making penalty-free withdrawals for nonmedical spending after they turn 65.

Offering Financial Wellness Classes

One final way to help your employees save for retirement is by offering financial wellness classes. These courses teach employees how to budget, compare retirement plan investments and come up with strategies to reach their financial goals. According to "Challenge for Americans," 44 percent of participants in financial wellness classes said that it helped them save for retirement, while 35 percent said that it helped them save for major goals.

Make sure your employees know that while delaying retirement may still be part of their financial plan, they should have other options as well. This way, if they do delay retirement, it's out of choice rather than out of financial necessity.

Unless otherwise disclosed or agreed to in writing with a client, ADP, LLC and its affiliates (ADP) do not endorse or recommend specific investment companies or products, financial advisors or service providers; engage or compensate any financial advisor or firm for the provision of advice; offer financial, investment, tax or legal advice or management services; or serve in a fiduciary capacity with respect to retirement plans. Investment options are available for all "ADP Direct Products" through either ADP Broker-Dealer, Inc. (Member FINRA), an affiliate of ADP, LLC, (ADP BD) or (in the case of certain investments) ADP, LLC. Only licensed representatives of ADP BD or, in the case of certain products, of an external broker-dealer that has executed a marketing agreement with ADP, LLC, may offer and sell ADP retirement products and services or speak to retirement plan features and/or investment options available in any ADP retirement product. Nothing in these materials is intended to be, nor should be construed as, a recommendation for a particular situation or plan. Registered representatives of ADP BD do not offer investment, tax or legal advice to individuals. Please consult with your own advisors for such advice. ADPBD20180313-0114

Tags: People Management and Growth Retirement Research & Insights Articles Midsize Business Large Business