The Retirement Readiness Crisis
Most Americans are not saving enough for retirement. The median retirement savings for Americans aged 55–64 is $134,000 — far short of the $1 million+ typically needed for a comfortable retirement. Employees who are not retirement-ready work longer than they want to, reducing workforce flexibility and increasing the cost of older workers' healthcare.
Auto-Enrollment and Auto-Escalation
Auto-enrollment — automatically enrolling employees in the 401k at a default contribution rate — dramatically improves participation rates. Auto-escalation — automatically increasing the contribution rate by 1% per year — improves savings rates over time. Together, these behavioral economics interventions can increase average 401k balances by 50–100% over 10 years.
Retirement Planning Education
Pro Tip
Retirement planning education is most effective when it is personalized and actionable. Generic retirement planning workshops have limited impact. Personalized retirement planning sessions that show employees their projected retirement income based on their current savings rate — and the specific actions they need to take to close the gap — are far more effective. Consider offering personalized retirement planning sessions as part of your financial wellness program.