Client Service

Many Strategies Can Encourage Young Employees to Save

A variety of personal life factors might make it hard for some workers to save for retirement, but employers can utilize several promising tactics to drive up savings rates. 

By Amanda Umpierrez editors@strategic-i.com | December 12, 2016
Page 1 of 2

As the student loan crisis intensifies and day-to-day financial challenges remain the norm for many, employees are finding it increasingly tough to save for retirement, or even enroll in a retirement plan.

In such a challenging environment, employers can play an outsized role in improving financial health by incorporating several tactics to drive motivation and confidence in financial planning.

“What is most important is knowing your audience, and it’s ‘different strokes for different folks,’” says Geraldine O’Brien, vice president of communications at Newport Group. “This is a job for your human resources professionals because they know their employees best, and they know the best way to connect with their employees.”

While the heavy burden of student loans may be heightening debt for Millennials, causing some to avoid saving for retirement, automatic enrollment gives a helpful nudge to this group. O’Brien observes that many Millennials, once auto-enrolled, find they can actually afford to put at least a little away for retirement while also reducing student debt.

“The number one way to get people to save for their retirement and to enroll into their program is to have an auto-enrollment feature, so an employee would have to opt out of the plan,” agrees Lisa Chui, vice president of finance and human resources at Ubiquity Retirement and Savings. “Even though it’s a small percentage, one percent, two percent contribution, most of the time they will let it sit because they won’t see a huge decrease in their paycheck.”

Chui believes that adding automatic deferral increases to each participant’s enrollment is beneficial in accumulating retirement savings as well. If an employee currently contributes 2% of their paycheck to retirement savings and the number automatically bumps up to 3% in the new year, most employees won’t even notice the difference because of the small amount, Chui says.

For those employers who do not offer a system-wide auto-enroll, Chui advises that presentation, information and efficiency are key here.

“You can always just have it be sort of a manual auto rollout, just have the HR person present it as something that you just need to do,” she says. “They must focus on making it easy and making sure there are no barriers to enrollment.”

NEXT: Match remains a powerful incentive