There’s a lot competing for your employees’ attentions, and saving for retirement is often one of the furthest things from people’s minds. While this can feel frustrating, it’s also an opportunity to help millennials adopt great savings habits and get started early. If you want to help more employees in their 20s to join the 401(k) plan, you need to reach them at the right moment, use technology to create a seamless enrollment process, and give them the freedom to learn about their investments on their own time. Your goal is to make the plan more accessible, so employees can join and save without reservation.
Here are three strategies that we’ve gleaned from our conversations that you can implement at your company that could help improve Millennial retirement savings rates.
401(k) Onboarding Tips to Help Millennials Save for Retirement
1. Automatically enroll employees into the plan the moment they’re eligible.
There’s a reason why people’s good intentions to join the 401(k) plan fall to the wayside, procrastination and focusing on today’s needs are hard hurdles to jump over. Auto-enrollment eliminates employee inertia and is a proven way to boost 401(k) participation rates. Studies show companies that use automatic enrollment see a 91% participation rate.
2 . Use technology to help explain the benefits of saving and to help employees set up their plans.
Companies traditionally rely on in-person seminars and paper-based investment election forms. While backed with good intentions, the traditional experience is disjointed and pulls a person out of their normal day, where technology can ease in seamlessly to a 25-year-old’s everyday life. According to a study published by Dartmouth College research study, financial seminars have small impacts on individuals’ retirement savings.
Since we are talking about millennials, good luck getting them to put down their smartphones in a 401(k) benefits seminar! Instead of seminars, try online and mobile enrollment and education. Some 401(k) providers offer electronic signup options, and we’re willing to bet that your younger employees will prefer to interact digitally with their 401(k) instead of signing up using paperwork. Our virtual advisor, Dave, provides plain English (and Spanish) employee communications and advice, via online and mobile devices.
3. Modernize your communication channels.
It’s not just about offering the ability to enroll in your 401(k) via phone, you actually need to be able to reach your millennial employees on their devices. Did you know that text messages outrank phone calls as the dominant form of communication among millennials? Try communicating with your employees via text messages. Ask your 401(k) provider if they offer text-based onboarding as a means to get to those hard to reach millennials.
If your millennial employees aren’t saving enough for retirement you’re not alone! Federal Reserve reports show that fewer younger Americans had retirement accounts in 2013 than did in 2007.