For 70% of employees, regardless of their income level, saving for retirement is their top financial concern, The Standard learned in a survey. Their next concern is monthly expenses (57%), followed by medical expenses (52%), support in the event of a disability (52%) and paying the mortgage/rent (49%).
“We found that saving for retirement outweighs other important priorities, such as ensuring employees have enough money for a roof over their heads or medical expenses,” says Chris Dugan, director of retirement plan communications for The Standard. “Given its importance to employees, it’s crucial for advisers and employers to do what they can to help support their retirement readiness efforts.”
Only 33% of employees are confident about their level of retirement readiness. Dugan suggests that sponsors adopt automatic enrollment and escalation, noting that the survey found that 68% of employees support those options. Among Millennials, it’s 70%; Gen Xers, 66%; and Boomers, 64%.
“Employers should also consider a managed account service as the qualified default investment alternative, which offers annual automatic deferral rate increases that are customized to the needs of an individual,” Dugan adds. “For most, this is just a 1% or 2% increase. But even a small additional increase each year can help make a specific goal a reality.”
The survey also found that 50% of employees are not comfortable selecting their retirement plan options, and 55% would like to turn to a professional to make those decisions.
“Employees can benefit from using a managed account service through their retirement plan, which is often very affordable, to help with investment decisions,” Dugan says.