A 401(k) is defined as a contribution plan where employees can deduct money from their pay in order to save for life after their career. Many view their 401(k) as the key to a relaxing, work-free lifestyle. While this definition may seem fairly simple, nearly 50 percent of Americans don’t fully understand their benefit materials. Proper education on 401(k) benefits is vital to setting employees up for success in their life after the office. Here are two reasons why it’s important to educate your workforce on their retirement benefits.
Employees don’t recognize the importance
Seventy-four percent of employees state that they don’t understand their retirement benefits. Why is this education falling short? The age demographic of the current workforce is one contributing factor. With millennials making up the largest generational sector in America, many employers don’t recognize the concerns of this unique generation, and young employees don’t always see their 401(k) as saving for retirement. Many just see money they desperately need deducted from their paycheck. This often leads millennials to opt out of investing in their retirement. Not saving can be detrimental to their future, making proper education even more important.
The options aren’t always clear
While employees don’t always understand the importance of their 401(k), some are also confused by the numerous different options available. From automatic savings to various other stock investments, there are multiple ways to create a retirement plan that’s right for each individual. These options should be clearly outlined on day one of employment. Setting up meetings between new hires and benefit professionals, or holding company wide training sessions on how to properly manage a 401(k) are great places to start. Follow-up education is important. HR should proactively remind employees about these benefits and be available to answer questions whenever needed.
Everyone wants to be able to retire comfortably and live their desired lifestyle; however, without proper education, many employees will come up short. In order to be sure your workforce is prepared for retirement, implement educational sessions early to ensure each individual fully understands the importance of their 401(k).
For more workplace benefit tips, check out our blog on how to make open enrollment easier on your employees!
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