Long-term goal setting is tough for anyone but that’s especially true for the youngest employees in our organizations. Reports vary on average savings rates for young employees – from 7% to 14% depending on your source – but the bigger picture is clear: by and large, Americans aren’t on track to have sufficient savings when it’s time to retire. Those who are best positioned to right their ships are our youngest employees – since they can benefit most from good old compound interest.
So what can we do to encourage more of our young workers to participate in their 401(k)s? There are some key elements of the plan design – company match, speedy vesting, automatic enrollment, and enrollment incentives – that can help. But it is equally important to create a company culture that is focused on financial wellness. And communications play a large role in that.
Creating a culture focused on financial health requires a holistic approach. Make sure you’re doing these three things to support it:
- Empowering the individual.
One of the great things about the younger workforce is that, by and large, they’re a tech-savvy bunch. They’ll be comfortable accessing online tools and resources made available to them. Your plan administrator can provide videos and calculators. Lean on those but consider creating your own tools that reflect your unique brand. And communicate about them often.
But don’t stop there. Use targeted messaging, so your communications are more likely to land. Are there folks not participating in the 401(k) at all? Talk to them about any barriers and give them some options for getting started. Are some employees not contributing up to the company match? Show them how much faster their accounts could grow with higher contributions. Regular personalized statements are also a great idea.
Think about the timing of your communications too. We can’t pretend that what’s happening in the world at large doesn’t impact how employees feel about their retirement plans. If markets are volatile, talk about it. This is a perfect opportunity to build trust with your people.
2. Engaging younger employees.
Too often our retirement communications feature smiling silver foxes well on their way to a happy retirement. But if we want younger employees to participate, it’s important that they see and hear from people like themselves. Testimonials from younger employees about how and why they are planning for retirement could be featured in videos, live meetings, and more.
Millennials and Gen Zers are socially motivated. Are there ways to add social components to your outreach strategy? How about holding information sessions over lunch or happy hour? A celebration for National 401(k) Day? (Yes. That is a thing. Mark your calendar for September 8, 2023.)
3. Getting leadership involved.
Get managers and execs talking about the importance of saving for retirement. Meetings and town halls are a great opportunity for this, as are one-on-one meetings. Ask mentors to share their own experiences. If you want to truly create a culture that cares about retirement savings as an aspect of financial well-being, leadership needs to be involved.
Getting your younger workers on board with your 401(k) requires cultivating a culture that supports and encourages their participation. If you need help developing an engagement strategy for your 401(k) plan, contact us at The O’Keefe Group.
