I’m about to talk to you about your company’s retirement plan and your role in ensuring people’s current stability doesn’t impact their future stability. But before I was going to do that, I had planned on listing all the other things you’re in charge of too. That list was overwhelming, so instead I’m just going to make my case as to why you need to make room in your brain for the likely retirement crisis within your organization.
You know how difficult it is to provide an attractive retirement plan for your employees. You have to pick attractive investment options, make sure fees are reasonable, offer education opportunities, and review the impact of your match strategy. Giving your co-workers even the slightest chance at a successful retirement is a lot of work.
Employees regularly battle the need to balance their financial futures with their very real financial present. Sure, they know it’s important to save for retirement consistently and aggressively, but decisions they’ve previously made and current obligations are preventing them from doing it.
Here’s what I mean.
John is 32 and makes a good income. However, he just spent nearly $80,000 on a truck that will limit him to “hitting the match” for the next 7 years because the payments are so large. It’s really easy to say his decision isn’t your problem, but the thing is – it is.
Sarah is a single mom and has trouble making ends meet because her ex-partner doesn’t pay his child support regularly. She’s worked with you for three years but has yet to start contributing to her 401(k) because she doesn’t have the financial stability to do so. Again, whether you like it or not, this is a problem for you too.
Madison is an outstanding executive and is one of those people you can’t imagine your company being without. However, she has tens of thousands of dollars’ worth of student loans from her master’s degree, which helped make her so attractive to you in the first place. Those payments are keeping her from making any contribution to her retirement account. Her financial fragility will be an issue for you soon, if it isn’t already.
Situations like these cause people to knowingly (or unknowingly) ignore their financial futures. And, unless your employees can achieve a base level of financial stability, these sorts of situations will repeat themselves. The retirement plan you’ve spent so much time and effort on will go underutilized, if not unused altogether, by a number of people who need the benefits it offers.
I regularly encounter organizations who struggle badly in this area. While a significant amount of resources are spent on providing opportunities for the financial future of your workforce, and rightfully so, the opportunity to help the same people overcome the financial stress they presently face, often goes ignored. If you want a widely impactful retirement plan, the present must be addressed.
A financially stable employee has better morale, higher productivity, and the likelihood of their on-time retirement is greatly enhanced. It’s a genuine win-win situation for both you as an employer and your people. Unfortunately, financial wellness is sometimes viewed as a check-the-box item in many workplaces. If the concept of financial wellness is taken seriously and consistently promoted in your workplace, however, tremendous progress can be made toward achieving financial stability for your employees and making a difference in the long-term health of your organization.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial expert. He’s a USA TODAY columnist, the author of ten books, and the CEO and Founder of Your Money Line and Hey Money. Pete is also the host of a popular radio show and podcast The Pete the Planner Show and appears regularly on TV and nationally syndicated radio programs. Pete is regularly considered one of the foremost experts on financial wellness.