Moving Beyond the Match: The Employer's Role in Retirement Security
Offering an employee retirement plan is just the starting point. The real challenge is getting your people to enroll, contribute and stay engaged over time. With strategic plan design and personalized tools, a retirement plan can become a powerful driver of financial wellness and retirement readiness.
What prevents today's workers from saving for retirement?
An ADP study of Generation X and millennial workers identified these top three reasons why workers struggle to prioritize saving for retirement :
- 62%, daily living expenses
- 46%, housing costs
- 31%, credit card debt
As a result, 71% have less than $100,000 saved in a workplace retirement plan and no other savings to lean on.
Everyday living expenses can make retirement savings goals seem unreachable. But better financial and retirement planning skills could help put financial well-being within reach and help improve retirement outcomes for all.
Why invest in employees' financial well-being?
Employees are feeling financial stress on the job. The 2023 Visa Financial Wellness Research report reveals that financial stress affects 40% of employees, reducing their productivity at work. Yet only two in five employers offer resources to help improve their employees' financial well-being, leaving a gap between employee needs and available support.
The complexity of retirement planning adds another layer of stress. Employees face substantial savings hurdles that leave them feeling overwhelmed and unprepared. A recent study found:
- 34% struggle to calculate retirement savings goals
- 23% can't project their retirement expenses
- 21% face uncertainty about where they'll live in retirement
- 20% don't know how to create a retirement income plan
For today's employees, having access to a retirement plan isn't enough. They need guidance, tools and support to encourage participation and help navigate all the ins and outs of retirement preparation.
Empowering your workforce to make retirement a reality
When more employees enroll, contribute at meaningful rates, capture the full company match and actively use plan features and resources, employers can build a powerful culture of financial preparedness.
Supporting your employees' financial security means investing in actionable solutions that have a meaningful impact:
Amplify your financial wellness education.
From emergency savings strategies to debt management to financial literacy education, make resources visible and easily accessible through company communications and onboarding materials. Track what tools are being used most frequently so you can tell what's working — or not.
Make the most of technology-driven planning tools.
Use individual participant data to deliver personalized retirement projections, engagement dashboards and actionable insights. These tools help employees set realistic savings targets, develop smart contribution strategies and select appropriate investment allocations aligned with their unique circumstances and retirement timeline.
Build in flexibility to meet real-life needs (and reduce early withdrawals).
Life happens, and retirement plans should accommodate the ebbs and flows without derailing long-term savings. For example, plan loan features allow participants to access funds without triggering taxes or penalties. Additionally, SECURE 2.0 Act provisions introduced game-changing options like emergency savings accounts and student loan matching contributions that address two of the biggest obstacles preventing younger workers from saving.
Make retirement plan participation easy.
Automatic enrollment eliminates barriers to starting to save, while auto-escalation gradually increases contribution rates over time, without requiring active decisions. Plus, timely reminders can prompt action at key moments, while intuitive tools help employees understand what they're gaining.
The best retirement plan is one that employees actually use.
ADP solutions combine flexible, compliance-ready plan design with seamless payroll integration, plus the tools, insights and support to help your workforce stay on track. Let us help ensure that your people aren't just signing up for a plan; they're contributing to it.
To learn more, reach out to an ADP retirement services specialist or call (800) 432-401K.
ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.
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