In a society of instant gratification, it can be extremely difficult to both comprehend and apply long-term financial strategies for acquiring adequate and comfortable retirement savings. This is in spite of the fact that numerous company savings and investment tools have been created with that purpose in mind.
Only 9% of participants in a State Street Global Advisors study responded that they have advanced knowledge in planning for their financial futures.
What’s missing is making a solid connection with workers so that they can better understand how to deal with their immediate financial needs and, concurrently, understand the need to invest for the future. If workers feel bogged down in their present financial problems and are being offered solutions to their immediate financial needs, then they tend to postpone any attempts at saving for the future in lieu of surviving their current financial conditions.
Building a satisfactory retirement nest egg takes time, consistency and patience, which are areas that seem to be stumbling blocks for the majority of American workers. The failure at prompting Americans to save for retirement has not been due to insufficiency in providing effective tools, but rather an inadequacy in making people aware of the underlying reasons for their poor savings habits. The “go and save” approach must be altered to better educate employees on how to effectively change saving habits.
What should businesses do?
The focus should shift to identifying causes for not saving sufficiently, and then implementing effective strategies to correct those faults. This requires an ongoing educational program that demonstrates how preparation for retirement is a journey and not simply a destination that people will magically arrive at one day. The day of retirement will come, but if that time has not been considered a part of daily life, then the funds for enjoying the golden years will undoubtedly be inadequate, turning what should be a joyous and relaxing time into a constant and harsh struggle for survival.
Employers and their advisers need to reach employees where they are by talking about solutions for current financial problems. If we provide them the tools to boost their financial literacy and make better informed financial decisions along the journey, then immediate stress is alleviated. This allows them to better understand how to save more for the future by utilizing available vehicles as well as to provide more income flow to place in savings.
It is a wise business decision to put effort into changing the methods by which retirement savings programs are presented, and to help employees discover and change the way they think about saving for retirement. This approach will help to effectively alleviate the financial problems of employees, which will reduce stress at both the home and work fronts. This will, in turn, improve productivity and boost company bottom lines both in the short and long term.
Register or login for access to this item and much more
All Employee Benefit Adviser content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access