These tools can help boost 401(k) participation
When it comes to maxing out a 401(k), it’s better to show employees, rather than tell.
So if you’re constantly encouraging your employees to increase their 401(k) contribution, your best bet to pass this handy 401(k) calculator around. Employees simply put in their pay period frequency, annual income, age and employer-match details, and they instantly get a detailed look at the percentage they need to contribute in order to get the most of their employer’s match while reaching the IRS limit.
Make sure employees understand that the ultimate goal here is maximizing your employer’s matching contribution, thereby maximizing take-home pay.
Another tool for the younger crowd
For a younger employee fresh out of school, it can be difficult to show them just how important it is to contribute to their 401(k) while they’re young.
So instead of a lecture, show them the benchmarks they need to be hitting, courtesy of Fidelity Investments. According to Fidelity’s calculations, most employees should aim to save at least eight times their ending salary in order to meet basic income needs in retirement. Therefore:
- Age 35: 1x salary
- Age 40: 2x salary
- Age 45: 3x salary
- Age 50: 4x salary
- Age 55: 5x salary
No lectures or complicated math here for the young folks. Have this information posted in break rooms, dispersed with pay envelopes and share it every time open enrollment or fee disclosures come around to keep it top of mind. That way the twenty-somethings of the office may get a fire lit under them to start saving for their golden years.
Do you have any strategies for increasing 401(k) enrollment? Let us know in the comments below.
Free Training & Resources
White Papers
Provided by Personify Health
White Papers
Provided by Anaplan
Further Reading
Employees may not understand lifestyle spending accounts (LSAs) as well as you think. That can lead to questions or just confusion. Thi...
Environmental, social and governance (ESG) ratings of companies was never as popular as many in the media made it out to be. And the more t...
With benefits costs climbing and new laws like SECURE 2.0 adding complexity, viewing employee benefits as a simple fixed cost is an outdate...
Here’s a common rollover scenario: An individual leaves one employer for another. The previous employer offered a 401(k) plan. The...
CFOs and benefits professionals can only do so much to influence employees to invest in a company 401(k) plan. So-called influencers are of...
Instant payouts are replacing traditional paychecks for millions of workers, according to a new PYMENTS Intelligence Report titled “Insta...