How Employers Can Help Close the Retirement Wealth Gap

Written By Anthony Powers

Retirement readiness is a critical issue impacting employees across all demographics. As the workforce becomes increasingly diverse, employers have a unique opportunity to foster an inclusive environment to empower everyone to achieve financial security once retirement comes. By implementing thoughtful strategies and leveraging plan design features, employers can break down barriers and provide equal access to retirement savings tools. This not only benefits individual employees but also strengthens the overall financial well-being of the workforce. Explore actionable steps you as an employer can take to engage your employees in retirement planning, regardless of their background, life stage, or financial circumstances.

Steps employers can take to bridge the gap for unengaged employees in their retirement planning journey:

  • Improve communication. Economist Impact found poor communications on employee benefits hindered utilization, with some employees disproportionally reporting difficulty taking full advantage of available benefits.

  • Provide targeted outreach and education. Offer targeted financial education programs that address the specific needs and challenges faced by some workers.

  • Promote one-on-one meetings with financial advisors. Encouraging personal meetings with financial advisors can build trust and provide tailored advice, enabling workers to better navigate retirement planning.

  • Implement auto features and matching contributions. Instituting automatic enrollment in retirement plans and auto-escalation of contributions can significantly increase participation rates. Moreover, providing matching contributions incentivizes employees to save more by leveraging employer contributions, which compound over time to increase their retirement savings.

  • Provide emergency savings support. Use pension-linked emergency savings accounts (PLESAs) to help households better respond to financial emergencies and avoid withdrawing funds from their retirement accounts to pay for unplanned expenses.

A retirement-ready workforce is more engaged, productive, and loyal. Employees who feel supported and equipped to achieve their long-term financial goals are more likely to remain committed to their employer, reducing costly turnover. This holistic approach not only enhances the lives of individual employees but also strengthens the organization as a whole. If your organization is looking to enhance its communications on employee offerings, get in contact with our trusted advisors to begin navigating the path toward retirement success.

Sources:

(2024, May 6). Benefits 2.0 Building a market-leading benefits strategy. Economist Impact. https://si-interactive.s3.amazonaws.com/prod/plansponsor-com/wp-content/uploads/2024/04/17171018/Benefits-2.0-Full-research-findings-Copy.pdf

Allianz Life Insurance Company of North America (n.d.). Three tips to help diverse Americans find their first financial professional. Allianz. https://www.allianzlife.com/get-answers/three-tips-to-help-diverse-americans-find-first-financial-professional

Waggoner, J. (2023, October 3). Getting Retirement Advice Isn’t Always Easy for Black Savers. AARP. https://www.aarp.org/retirement/planning-for-retirement/info-2023/black-savers-access-to-financial-advice.html

Anthony Powers
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