Employees are more involved in retirement contributions, tracking, and preparedness if their jobs help them out
There is no shortage of people around the world who are worried about retirement. But one thing could change that: their jobs.
A study from T. Rowe Price found that employers who match retirement contributions or have automatic programs set up for their employees have more workers who are prepared for retirement than those who don’t help.
Nearly half — 48 percent — of companies admit that they have a metric tracking system to monitor and evaluate how prepared employees are for retirement. Of those companies who do have a system in place, employees are more likely to be financially preparing for retirement than those who don’t track their metrics.
The study evaluated 401(k) plans in companies with assets between $100 million and $1 billion by surveying human resources and retirement benefits administrators.
Almost 90 percent of companies offer a matching contribution to a 401(k) plan, and 72 percent auto-enroll employees in those plans. But after that, employer involvement isn’t much more. For example, less than half of companies surveyed say they periodically enroll non-participants in their retirement plans.
Monitoring means tracking holes in plans
The good news is that major companies are not only offering retirement plans and matching contributions, but they’re also making sure their employees are financially prepared for their lives after work. For companies that can see how their employees tackle money issues, though, there seem to be a few problems.
For example, 70 percent say that “leakage” is a problem. Leakage happens when plan loans default, or there are hardship withdrawals, or early cash-outs. This holds back employees from being financially prepared for retirement because they have to tap into their plans well before they should, causing them to lose out on cash that will help them out later in life.
The good news is that 58 percent of companies offer financial wellness programs to monitor day-to-day finances. Another 53 percent have education options available to employees, letting them know the lasting drawbacks of cashing in on retirement money too soon. Half of the companies surveyed also give financial counseling, and 47 percent go as far as offering debt management tools and services.
Retirement is a constant struggle
Not all of us have the luxury of working for multimillion-dollar companies that can match our retirement plan contributions. Even more so, not all of us have access to individual financial planning to meet our specific needs. It’s a great benefit for employees, but not everyone receives this.
The truth is, retirement is our single biggest stressor right now. More than almost anything, we are worried we are going to outlive our savings. Even if we can work until we die, we will forever save for retirement and never actually retire.
Retirement isn’t easy for anyone right now, but especially hard for women. Ladies struggle hard to save for retirement, specifically because they earn less over their lifetimes, which means they can stash away less cash throughout their lives, too. Because they live longer lives than their male counterparts, they end up paying more for retirement — specifically for health care — than men.
Article last modified on July 21, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Look What Happens When Companies Care About Employee Retirement - AMP.