…and help employees avoid costly mistakes
research from the LIMRA blog
Based on LIMRA Retirement Research, here are five ways plan sponsors can encourage successful retirement savings by employees:
- Automatically enroll employees into a retirement savings plan, starting with a contribution rate of at least seven percent. Then, raise the contribution by at least one percent annually or with each salary increase.
- Default contributions and savings to a target date fund. Translation: direct employee contributions to a professionally managed portfolio of investments that rebalances the asset allocation to reflect time until retirement. The investment mix becomes more conservative as the retirement date gets closer.
- Re-enroll eligible employees annually. Your health plan is offered annually; shouldn’t your retirement plan be as well?
- Offer retirement income options to help participants make the transition from savings accumulation to retirement income.
- Provide ongoing education and planning tools to your employees to engage them and motivate them to save and plan.
For many Americans, retirement could last more than 20 years. Helping employees establish strong savings habits early in their working careers greatly improves their chances of a satisfying retirement. The resources employers once spent convincing employees to enroll can now be used for higher-level conversations on effective retirement planning.
It’s a “win” for everyone involved.