401k Retirement Wellness Exam

An 8-Step 401k Assessment To Help Drive Employee Retirement Readiness

Do the key features of your plan focus directly on getting your workforce fit for retirement? Use this review as a high-level guideline for prioritizing employee retirement readiness.

1. Automatic Enrollment and Escalation. Does your current plan design automatically enroll employees in the retirement plan and increase their contribution rate annually — allowing them to save more over time without having to think about it? According to Vanguard’s How America Saves 2024 report, 59% of Vanguard plans had adopted automatic enrollment, including 77% of plans with at least 1,000 participants. Most of those plans default employees into a target-date fund, at a deferral rate of 4% or higher. In addition, 69% of those plans have implemented automatic annual deferral rate increases.
2. Employer Contributions. Providing a competitive matching contribution and vesting schedule can incentivize employees to contribute more. Are you continually promoting your company match by clearly illustrating how it contributes to their retirement income goals?
3. Financial Education and Planning Resources. Do you currently offer online tools and calculators, as well as regular education sessions on financial literacy, emergency funds, budgeting, debt management, investing and retirement planning? In addition, providing access to a financial advisor for personalized planning can address individual needs and help improve retirement outcomes.
4. Diverse Investment Options. As part of a diverse investment lineup, have you considered a vetted selection of target-date funds, which offer a hands-off investment strategy and automatically adjust the asset mix as the employee approaches retirement? How about low-cost index funds, which help employees retain more of their investment returns?
5. Social Security Optimization Tools. Are you considering adding lifetime income options to help address employee concerns about outliving their income? Adding Social Security optimization tools may be just as effective. The Schwartz Center for Economic Policy recently found that delayed claiming of Social Security benefits can be a valuable way for plan participants to generate lifetime income. As funding issues with the Social Security trust fund become more urgent, helping employees with optimization strategies will become more important.
6. Health Savings Accounts (HSAs). If you offer a high-deductible health plan with a triple-tax-free HSA, are you educating employees on how the HSA can help fund healthcare costs in retirement? HSA savings can help offset Medicare premiums and many other expenses.
7. Behavioral Nudges. Are you periodically re-enrolling employees who have opted out, encouraging them to reconsider participation?  Have you considered using data to send personalized messages that highlight individual benefits and actions to take?
8. Monitoring and Adjusting the Plan. Are you continuously monitoring the plan’s performance and participant behaviors to identify areas for improvement?

Next step: Let’s get your company a 401k Wellness Benchmark review.  Book a meeting below.