Employers the Key to Helping Workers Save

Could it be that some working Americans think: “If only my retirement plan sponsor had given me more guidance, I’d have more money in retirement.”

A survey conducted by American Century Investments found out that’s the general feeling among many pre-retirees -at least those who work for employers offering a retirement plan.

The vast majority (80 percent) of survey respondents said they would have liked for their employers to give them a “nudge” or a “kick in the pants” to encourage savings.  Only 12 percent of pre-retirees (ages 55 to 65) indicate they “knew very well what I was doing,” when it came to investing retirement money.

Employers  should start administering those kicks in the pants sooner rather than later because the most recent study (data from 2011) by the Schwartz Center for Economic Policy Analysis at the New School reported that 68 percent of Americans aren’t saving anything to retirement plans.

According to the U.S. Government Accountability Office, 29 percent of households headed by someone age 55 and older have neither a pension nor retirement savings.  The GAO reported that the median savings is $104,000 for households headed by someone ages 55 to 64, and $148,000 for households headed by someone ages 65-74.  According to the GAO, this is equal to an inflation-projected annuity of $310 to $649 per month, respectively.

The good news is, many employers are willing to help with employees’ financial wellness. An Aon Hewitt survey found that 93 percent of employers are prioritizing employees’ financial well being in 2015, compared with 76 percent in 2014.

“Companies are also waking up to the idea that traditional financial education only works for a small population,” said Steve Vernon, consulting research scholar at Stanford University’s Center on Longevity, in and August 2015 Talent Management story. “People really need a kick to get engaged, and they need more than just facts and figures.”

Source: Journal of Financial Planning