Benefit Insights | Automatic Enrollment Is On The Rise Summer 2019
A NON-TECHNICAL REVIEW OF QUALIFIED RETIREMENT PLAN LEGISLATIVE AND ADMINISTRATIVE ISSUES
BUCKET LIST: RETIREMENT
THE ECONOMY CONTINUES AT ITS STRONG PACE, KEEPING UNEMPLOYMENT AT ITS LOWEST RATE IN NEARLY 50 YEARS. While this is usually good news, employee financial vulnerability is clouding this sunny forecast. The repercussions are impacting their ability to save for retirement.
Millennials are the most stressed by their financial situations, followed by Gen X and Baby Boomers according to PWC’s 8 th annual Employee Financial Wellness Survey released in June 2019 (Figure 1 bottom right). More than 80% of the employees surveyed believe they will have to work during retirement.
TOP TWO FINANCIAL CONCERNS
The top two financial concerns across age groups are:
1. Not having enough emergency savings for unexpected expenses. This is especially true for Millennials and Gen X. 2. Not being able to retire when they want to (37% of all employees); 52% of Baby Boomers ranked this as their biggest concern.
Nearly 32% of employees surveyed said they are not saving for retirement because they have too many other expenses and too much debt.
CAUSES OF FINANCIAL STRESS
• For 19%, retirement readiness is impeded because they are providing financial support to parents, in-laws, or adult children. More than 50% also have to support dependent children. • Credit card debt is increasing across all generations because it is the only way employees, especially Gen X and Baby Boomers, can afford necessities.
HOW YOU CAN HELP EMPLOYEES SAVE MORE
Employers are finding innovative ways to help employee save:
• Automatically enrolling all employees (not just new hires) in retirement plans. • Setting an initial contribution amount and automatically increasing that amount over time. • Reviewing employee group demographics, then setting your Qualified Default Investment Alternative to a target date fund, target risk assess allocation, or separately managed account.