According to the Consumer Federation of America, statistics indicate that American personal savings rate is at its lowest since the financial crisis in 200, at just 6.0 percent of disposable income. This is bad news for employers who are hoping to help their employees become financially prepared for retirement. However, there are ways that employers can subtly encourage employees to save more.
1. Create a competition
Hold a competition, at least once per year, to see who has contributed the most. The winner should receive some sort of coveted. prize.
2. Make them opt-out instead of opt-in
Setting up a 401k can seem intimidating and overwhelming, especially for those who have never set one up before. Having each employee automatically enrolled into the 401k is a great way to encourage them to contribute. It will be more of a hassle to not contribute than it would be to just stay enrolled. The contribution could be small, say 3 or 4%, and the investments can be basic, moderate ones that the company selects.
3. Discuss with each employee how they envision their lives after retirement
Many people are so wrapped up in work, family and obligations to daydream about what they might want to do when they retire. Strike up a conversation with your employees about where they see themselves once their career ends. Talk to them about where they'd want to live, what kind of lifestyle they want and then they may reconsider their contribution amount.
4. Pay attention to investment options
When faced with a list of options, people typically aim for one of the first choices. Be sure to include a mixture of investments at the beginning of your list, that way employees are more interested in contributing a little bit to each of them.
There are many things that an employer can do to help their employees make the right financial decisions. At the end of the day, as long as you're providing solid investment options, talking to employees about their choices, and encouraging them to prepare for retirement, you're on the right track.