Getting Gen X Employees on Board with Retirement Planning
Employee retirement planning is a frequent challenge for small businesses. Employees may not always be familiar (or comfortable with) the notion of saving for something that may still be a while off, such as retirement. They may also not know how to go about the process, even if they want to. Stocks and compound interest could be new to them and without having a bit of understanding about these high-level concepts, they may feel overwhelmed and choose not to participate in their plan.
Gen Xers, like their millennial counterparts, may often focus more on what's happening here and now and in their immediate future, such as buying and setting up a home, raising a family, or caring for one or more older parents.
This doesn't mean that employee retirement planning shouldn't be a priority for this generation of workers. On the contrary, it's in everyone's best interest to make the process work. But how do you get Gen X employees enthusiastic and willing to participate? Experts offer these four tips:
1. Offer education and resources. The more planning-related materials your employees have access to, the more informed their decisions can be. Materials outlining the benefits of planning (and the ease of participation) can be made available in printed form, through webinars, workshops, vendor presentations, and so on.
"When I do 401(k) enrollment meetings with clients that have a big Gen X population, I use examples that are relevant to them," notes Angela Yutangco, Paychex HR Consultant. "I tell them to start by creating a budget for it, even a small one. Look for areas where you can cut back, such as avoiding small expenses on things you don't entirely need – your daily Starbucks latte, for example. This could add up to saving $20 a week, which you can put into a retirement account that adds up to an extra $1,040 a year. Compounded over time, this can make a huge difference, especially with a company match."
2. Automate retirement plan enrollment. Gen Xers are generally very comfortable with online transactions, so having the option to automatically enroll employees in a 401(k) plan may generate more enthusiasm and participation. "Employees are often concerned that participation will make their paychecks even smaller and they have a hard time grasping the pre-tax benefits," notes Paychex HR Consultant Tanya Johnson. "When they're auto-enrolled in the plan, they can see that the salary deferral doesn't have a very significant impact on their paychecks."
3. Match employee contributions. Some employees may feel it's simply too risky to sink a portion of their hard-earned money in a plan with far-future benefits. When you incentivize employee retirement contributions by offering to match their funds, their interest is likely to pick up. In many cases, a matching contribution can effectively double your employee's savings.
4. Make enrollment easy. In the past, enrolling in a retirement plan involved intimidating amounts of education and paperwork – enough to cause most anyone to hesitate. Today's online tools and resources have changed that landscape.
"Keep the process as simple as possible," advises Susan Draper, Paychex HR Consultant. "Offer walk-in sessions for employees to ask a financial advisor quick questions. Provide a link to the 401(k) plan in a place that employees already use on a regular basis. Offer a phone app so employees feel as connected to the plan as they do to their other must-have apps."
The gains from an employee retirement plan apply across the board. Employees benefit from long-range savings, but employers see benefits as well. In today's competitive job market, providing traditional employee benefits such as a 401(k) plan and health insurance can set a small business apart from its competition. It can also help in your efforts to boost employee retention and recruitment.