Your workers do want help when it comes to socking away money for retirement. And they have a very specific time frame in mind for when that help should come.
According to the study by LIMRA, an insurance and financial services association, an impressive 67% of 401(k) participants said automatic escalation in their 401(k) plans should begin when they reach age 45.
And by what amount should their plans increase? The study found that:
- 45% of workers (especially those with incomes of $75K or more) said their plans should increase by 2% or more annually, and
- 22% of workers said the increase should be 1% per year.
Of course, this doesn’t mean auto-escalation can’t work for your entire workforce. In fact, the study offered some compelling evidence of the need for employers to give their workers a little push when it comes to saving.
Only 15% of the employees in the study (not including the ones with auto-escalation plans), increased their contribution rate in the past 12 months. And 42% never changes their investments.
To see if you auto-escalation is right for you, try sending out a short survey to your employees.
