Help your employees save for retirement

When you look around your business, how many of your employees are currently saving for retirement? Working to make that number grow, especially among your lowest-wage workers, can benefit not only the employees themselves, but also your business through greater employee loyalty.

However, to do so effectively takes more than just reaching out to those employees during open enrollment. Instead, employers should provide retirement education and other financial literacy resources year-round while also taking steps to make employees feel more engaged with their jobs in general, experts explained.

"Engagement is the key," said Jhoanna Astudillo, Hispanic segment leader for consumer banking at BOK Financial^®. "If a workforce is not engaged, they're not even going to look at their employer-sponsored benefits, especially retirement savings plans, because they're not looking at their employer as their journey. They're viewing it as only a step on their journey."

Bridging the gap in retirement preparedness

When engaging with workers, it's important to engage with all potential retirement plan participants—including the lowest earners who may be financially struggling the most due to inflation and high interest rates, as well as a lack of financial education resources, experts said.

"Oftentimes low-income workers lack financial literacy or have a lack of understanding about retirement savings options. This lack of knowledge can hinder their ability to make informed decisions about saving for the future," explained Brandy Marion, Institutional Wealth education manager at BOK Financial.

Additionally, workers who have immigrated or are first-generation Americans may be particularly hesitant to have money taken out of their paychecks for retirement savings because of cultural differences between the U.S. and their home countries, noted Astudillo.

"The concept of a 401(k) is unfamiliar in Latin America. There, most jobs are contract-based, with a term," she explained. "They may not understand that the money taken out of a paycheck for a 401(k) is still their money and that they can take it if they leave the job."

How to engage lower-earning workers

It doesn't have to be this way, Marion and Astudillo agreed. Instead, employers can proactively take steps to engage with these workers and help them participate in plans that will put them on the right path toward retirement. Here are some tips for getting started.

Be familiar with employees' individual financial circumstances, including challenges. For example, some low-earning workers may be living paycheck to paycheck or have unstable incomes. "If they're not earning enough to address their immediate needs such as shelter and food, they may not be thinking about retirement," Astudillo noted.

Employers can still engage with workers in these situations. However, it must be in ways that are mindful and sensitive to their concerns and needs. For example, you can set low-earning workers up with financial advisors or coaches that can individually help them create or review their budgets or use a paycheck calculator to show them the value of making a pre-tax retirement contribution, Marion suggested.
Use straightforward communications. In any communication with employees about retirement benefits, it's important to use simple language to explain aspects such as investment options and contribution details. Some workers may not speak English or have access to a smartphone or computer at work, so HR or benefits teams should be sure to provide communication in workers' native languages in addition to English and both printed and digital materials.
Identify and train centers of influence (COIs) among the workforce. They can either be people in formal leadership roles, such as managers and team leads who can positively impact their teams' understanding of benefits, or they may be people with informal influence, such as well-respected colleagues whom other employees tend to turn to for advice, Marion said.

Once you have identified appropriate COIs among your workforce, be sure to confirm their willingness to take on this role. The potential COIs should be informed of any benefits that they would receive from taking on this additional responsibility. For example, will they be compensated for the time spent on their own training and the time spent educating others? Will they receive a change in title?

Those individuals who are willing to take on COI roles should then be trained on financial topics such as how to save for retirement, so that they can, in turn, educate other employees. "You need to train the trainer," Astudillo said.
Tailor benefits. Finally, it's important to keep in mind that the benefit options that work well for higher-earning workers may not work well for those with low or unstable incomes. As a result, you may want to provide flexible contribution options, Marion said. You can also address the concerns of workers who are living paycheck to paycheck by linking retirement and emergency funds, she continued.

"Encouraging participants to allocate a portion of their retirement savings toward an emergency fund helps address immediate financial needs without jeopardizing long-term savings," she explained.