While employees value their 401(k) savings, managers can help them stretch it much further, and strengthen their engagement with the company in general, by teaching them what to do with it. According to research from Principal Financial Group, employees who receive one-on-one financial education in the workplace are more likely to boost their retirement savings and income than those who only receive standard literature on benefits or attend group workshops.
Principal’s analysis finds that those who attend one-on-one meetings draw an average of $905 per month more in retirement income — 69 percent more than those who only took group sessions. The findings point to the value of financial education as a workplace incentive, allowing managers to boost morale by giving employees more freedom over their financial future.
“We know from face-to-face educational meetings that retirement savers benefit from hearing a person explain how the retirement plan works rather than having to shuffle through documents by themselves,” said Barrie Christman, vice president, individual investor services at Principal Financial, in a statement. “Take it a step further with personalized one-on-one meetings on company time and significantly higher numbers of participants are taking actions that can help.”
Drawing on responses from individuals who attended Principal’s education events, the group found that 92 percent of those who attended one-on-one meetings in 2011 agreed to take a positive action with their retirement savings. Additionally, 80 percent of one-on-one attendees actually completed this action.
While 19 percent of one-on-one meeting participants decided to increase their retirement plan contribution, only 2 percent of those attending group educational meetings did the same.
“Even a small increase in savings can make a big difference in retirement security over time, especially when there is a commitment to keep increasing contributions,” said Christman, who emphasized that while offering retirement benefits is an important way to strengthen employee engagement, as important is to teach them how to utilize it fully. “While plan design — automatic savings features, higher default rates and employer match — plays a critical role in empowering participants to save effectively, face-to-face education is a key tool in the retirement readiness toolbox.”