To set the groundwork for long-term success, you need to do everything in your power to retain your most talented employees.
When your employees are satisfied with your benefits plan, they are more likely to buy into the success of your company and stay longer. Employee retirement plans such as a 401(k) are one of the best ways to ensure employees stay invested in your organization.
With millennials now comprising the single largest generation in the U.S. workforce, it’s crucial to get your younger employees to enroll and participate in your company’s 401(k) plan. Otherwise, you risk losing young talent to the millennial trend of “job-hopping”.
If your company has low 401(k) plan participation rates among your younger employees, use these strategies for educating younger workers and encouraging them to enroll in your plan.
Millennial Objections To 401(k) Plan Participation
Think back to your 20s. How concerned were you with your retirement? Other than perhaps having a vague idea of traveling around the world or relaxing on the rocky coast of Maine, the answer is likely “not very.”
It’s difficult for your younger employees to imagine growing older and no longer being able to work. It’s even more difficult for them to grasp how much money they will need to comfortably retire.
Even more forward-thinking younger employees may be reluctant to participate in your plan because of:
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Lower income levels
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High student loan payments
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Concerns about accessing their funds
Having enough money to pay their bills and loan payments is a real concern. When you discuss your employees’ 401(k) options and the benefits of participating, it’s important to be sensitive to these concerns. However, despite these concerns, it’s in your company’s and your employees’ best interests to participate.
Overcoming Millennial Retirement Plan Participation Objections
While your employees may have real concerns about having enough money at the end of the month, thre are usually ways they can cut back and meet their financial needs while still participating in your 401(k) plan.
For instance, many younger employees pay for cable TV access they can’t really afford. They may also order takeout meals or eat at restaurants too frequently. While they might justify these expenses with phrases such as “you only live once” or “it’s better to have fun when you’re young,” spending money they don’t have at the expense of their retirement planning puts their financial futures in jeopardy.
If you’re not a professional financial advisor or wealth manager, it’s safer not to advise your employees on their personal money management strategies. However, you may want to consider bringing in a professional to consult with your employees about their finances and financial futures. This could help your employees reevaluate their finances and spur participation in your 401(k) plan.
The Strongest Argument For 401(k) Participation: Free Money
The best way to encourage younger employees to participate in your employee 401(k) plan is to emphasize that you match their contributions. In case that’s not clear enough, explain to them that it’s free money.
Inform your millennial employees that simply by enrolling in your plan and contributing up to your matching limit, they are essentially doubling their investment. While it may be money they won’t be able to spend until they’re much older, it will help them meet their retirement planning goals.
The Risks of Low Millennial 401(k) Plan Participation
When you struggle to enroll millennial employees in your 401(k) employee retirement plan, you risk a snowball effect of low participation. Younger employees tend to consult with their peers about plan participation. If your current millennial employees do not participate, they’re unlikely to advocate for the plan as you onboard new millennial employees.
This lack of internal advocates threatens to drag down your overall participation rate, which could impact the limits on how much your higher-compensated employees can contribute, as well as the overall reputation of your benefits package.
Take A Proactive Approach
While you can’t require your younger employees to participate, consistent communications and encouragement from senior management should help improve enrollment rates among your millennial employees.
By bringing in an independent financial advisor and emphasizing the benefits of your matching contribution, you can motivate more of your younger, talented employees to participate in your 401(k) plan, which should boost your overall employee retention rates.
Explore how retirement benefits impact employee retention by reading our free e-book, Make Retirement Benefits Your Secret Weapon For Employee Retention.
