How to Educate Employees About Their Retirement Plan

Image: How to Educate Employees About Their Retirement Plan

Humans feel stress daily. It's a part of life, but that doesn’t mean it needs to creep into the workplace. Outside stress can cause a serious lack of focus among affected employees, and one of the biggest stressors is money. In fact, nearly half of employees who report feeling financially stressed admit that their personal finances have been a distraction at work—and among those employees, 56 percent admit to spending three or more hours per week dealing with or thinking about issues related to their personal finances while on company time.1

It becomes clear, then, that to decrease the amount of time employees spend stressing about their finances on the clock, employers should provide some level of retirement readiness education. If your company has a retirement plan that employees can save in, a good starting point is to provide education about the plan. But you’re not an expert in the retirement industry, so how do you deliver information about your sponsored retirement plan without making it too complicated to understand? These three tips may help.


Retirement plan education:
Helping employees understand their savings plan


Keep it simple

The most important part of employee education is to keep everything as easy-to-digest as possible. Most employees aren’t familiar with the ins-and-outs of retirement savings accounts, so if they are intimidated by any aspect, they might not sign up at all. Instead, provide the right amount of information so they understand what they get if they sign up (such as an employer match and compounding interest) and how to start contributing. Streamlining the process usually improves enrollment, and you can always offer more in-depth information for those who want to learn more.

Learn more: Benefits of automatic enrollment in a retirement plan

It is also helpful to know your audience when deciding how to educate. Employees who have regular access to a computer may prefer online features such as webinars and videos, while those who aren’t as tech-savvy may need a more hands-on approach, such as convenient enrollment meetings and one-on-one appointments with someone who can help them set up their plan.


Be proactive

Saving for retirement can become “out of sight, out of mind” after enrollment. Event-based messaging, like an email reminding an employee who just got a raise that 401(k) contributions can be adjusted to reflect the increase in salary, keeps their retirement savings plan top-of-mind and provides the opportunity to make changes—now or at a future date.


Make investing easy

Part of saving for retirement is the participant making the right choices about how to invest money and when to change their strategy. But how do employees know which funds are the best fit for them individually if they aren’t particularly investment savvy? Managed model portfolios help simplify investment options with default age groups; a young employee is put into a more aggressive model and as the employee ages, the model becomes more conservative.

Sometimes it doesn't matter how much education or how many opportunities employees are given—they’ll never make the effort to enroll. So having automatic enrollment and automatic increase included as part of your retirement plan reduces the employee’s effort to start saving for retirement to nearly zero. They are automatically enrolled in the plan unless they make the effort to opt-out, and their contributions will automatically go up each year, reaching a predetermined cap, unless they make the effort to go in and change it. Automation gives your employees more time to focus on achieving financial security with the 401(k) education you’ve provided. And that’s the whole goal after all, right?


For more information about helping employees understand their retirement plan or to start a new plan to help your employees reach their retirement goals, contact our retirement plan professionals at 800-345-6363.



1”2023 Employee Financial Wellness Survey” PWC, 2023.