Fresh 401(k) data is in and it doesn’t look good.
Some recent studies from HelloWallet and Vanguard show some alarming stats: More than 25% of workers are withdrawing from their 401(k) early to pay mortgages, credit card debt and other bills. According to Vanguard, there’s a 12% increase in the number of workers who took loans out against or withdrew money from their 401(k) since 2008.
Diane Oakley, executive director of the National Institute on Retirement Security, told the Washington Post: “We’re going from bad to worse. Already, fewer private-sector workers have access to stable pension plans. And the savings in indivudal retirement savings accounts like 401(k) plans – which already are severely underfunded – continue to leak out at a high rate.”
The best thing you can do right now to make sure your employees are planning for their future is to educate. Remember: Two-thirds of workers in a recent survey said they trust their employers when it comes to financial advice – the problem is that a majority are unwilling to ask for that advice.
Back to class
It may be time to hold informational sessions on financial planning. Not only would this educate employees who need the help but aren’t asking, but it will also do wonders for morale and building trust. And hopefully it can prevent your workers from making a dangerous financial decision that they’ll regret later.
These don’t have to be formal, weekly classes with homework and assignments. These could be once-a-month lunch sessions that hit on key points through useful handouts and articles. Here’s a good start from Vanguard: “7 ways to wreck your 401(k)”.
Are your employees educated on retirement and financial planning? Let us know your tips in the comments below.