Construction Today - May 2017 - 15
One of the biggest challenges in engaging
employees, in any industry, is awareness
about retirement saving needs. The general
rule of thumb in the industry is that any
employee will require 85 percent of their
pre-retirement income in order to live
comfortably in retirement, for the length of
their retirement. For example, if an employee
makes $30,000 a year, they'll need to save
$26,000 for every year they will spend in
retirement. Since people are living longer,
many can expect to be in retirement for
at least 20 years, which alone adds up to
$520,000 in savings needed to maintain a
standard of living throughout retirement.
The specific amount any given employee
may need will depend on several factors, including their expected retirement date, their
monthly expenses, and their life expectancy,
but we can say with some certainty that if
someone has not prepared to have around
85 percent of their pre-retirement income or
more, they have not saved enough.
This is especially important to keep in
mind as you consider how you'll retain talent
in an industry where most employees have
not saved at all, or not enough. In such situations, it becomes even more important that
those employees have access to not just any
retirement savings plan, but to one that will
equip them to truly prepare for retirement.
Employees are Underserved
Clearly, this is an untapped opportunity for employers looking
to offer attractive compensation packages with limited resources.
When chosen well, a good 401(k) plan can be a win-win for both
the employer and the employee, costing the employer little but
giving the employee a significant boost in their ability to plan for
the future. That said, a 401(k) plan is only as good as the benefit employees receive from it. We've found that many employees who have
retirement plans feel unprepared to make intelligent choices when it
comes to their own contributions and savings.
Most workers, including construction workers, benefit from
additional help understanding basic questions such the pros-andcons of participating in a plan, how much they should be saving,
how to invest those savings, and when they might be able to retire.
But most do not feel confident answering those questions without
additional help; in a recent survey we conducted, only 29 percent
of those polled felt confident planning for retirement with the
resources they have.
Nathan Fisher is managing director for Fisher
Solutions. For more
information, visit www.
The Right Plan
Unfortunately, this may be because not all 401(k) service providers
offer the resources employees need to find that confidence, and
many of those resources can be difficult for employees to trust. That's
because a lot of the companies that provide 401(k) benefits pay their
advisers on commission for the sale of financial products that your
employees may not want or need. Because of this, very few advisers
can or will commit in writing to act in the best interests of your employees. That leads to employees relying on less qualified resources,
such as peers, family members or friends. Worse yet, some don't
engage in their plans at all.
When searching for a retirement service provider, combat this by
making sure first that the experts servicing your plan will be able
to give reliable, one on one advice to your employees. This kind of
counseling alone can improve participation rates by 39 percent,
and can increase retirement plan savings by 68 percent. Beyond
counseling, it's critical that your provider also offer a variety of tools
to help your employees understand their plan and make the most
of it. Look for online tools like contribution calculators and educational resources so your employees can learn more about retirement
planning and make better decisions for their futures.
After all, that financial security is what 401(k) plans are all about.
Happy employees who feel secure in their financial futures are likely
to make for better and more committed workers. In fact, 77 percent
of those employees polled in a recent survey said they would rather
work for an employer that not only offers a 401(k) plan, but also the
support they need to successfully plan for retirement. That support
could be just what you need to attract qualified construction professionals and keep them happy for years to come.
MAY 2017 CONSTRUCTION-TODAY.COM
Looking specifically at the construction
industry, we find things are even worse.
According to the fifth edition of "The Construction Chart Book" from The Center for
Construction Research and Training, participation levels in employment-based pension
plans in the construction industry are very
low: 38 percent for construction versus 54
percent for all industries. That means that a
majority of construction professionals aren't
actively participating in employer-sponsored
retirement planning either because these
plans aren't being offered, or because those
employees don't know what to do with the
plans they have.