Ineffective Education a Top Barrier to Saving

October 25, 2012 ( – Employers and employees face two main obstacles for retirement saving: tough economic times and ineffective education.

By Corie Russell | October 25, 2012
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“Times are tough, and many Americans are struggling to make ends meet,” Chris Augelli, vice president of product marketing and business development at ADP Retirement Services, told PLANSPONSOR. “And the list of demands on their financial resources is long: paying the mortgage, health care expenses, month-to-month bills, keeping up with rising energy costs, child care and saving for your child’s education. The list goes on and on.”  

As a result of competing financial goals and obligations, a seemingly distant event such as retirement can often end up at the bottom of the list.

The second barrier to retirement saving is ineffective communication and education. Americans understand they need to save more for retirement, but are frequently unsure how to go about achieving that goal. “Engaging employees in meaningful conversations about their retirement readiness is critical in spurring them to take the appropriate actions to improve their personal retirement outcomes, which also achieves the reciprocal goal of creating more satisfied and productive employees in the workplace,” Augelli said.

In 2011, ADP commissioned Chatham Partners to conduct a follow-up study about employee education, which found that plan participation increased sharply following an employee education enrollment meeting. The results indicated on average a 19% boost in participation rates for plans that held a meeting after moving their 401(k) program to ADP.