It’s January. A new year. A time of resolutions. School resumes. Football continues. The Grammys. Weather so cold my Labrador Retriever goes outside in a jacket (here in Iowa). Juan Pablo is The Bachelor. Retirement Readiness. Wait. What? That’s right. Retirement readiness. We all want to retire one day. So let’s be ready.
Working in the retirement industry, I often hear those I interact with ask their audience if they’re ready for retirement. But what does that really mean? After a long work-week, prompt “yes” answers will likely spout out from tired listeners. Some may stay silent, not knowing their answer. A better question to ask your audience is if they will be financially able to retire when they want. That’s where retirement readiness fits in. While each individual is responsible for his or her own financial stability, plan sponsors can help their employees pave a path toward financial stability for their retirement by utilizing retirement readiness features in their retirement plans. Having a retirement plan design that promotes retirement readiness not only helps employees prepare for an adequate retirement, it can also result in other rewards. That’s what The Principal® 10 Best Companies earned.
The Principal® 10 Best Companies for Employee Financial Security is a national program that recognizes small and mid-sized companies that excel at giving their employees a financial edge. It may be better than winning a Grammy or the Super Bowl. So what similarities do these awesome winners possess?
- All 10 of the 2013 winners have a defined contribution plan.
- All offer an employer matching contribution.
- The average plan participation rate is 90%; which is notably higher than the national average.1
- Many (70%) have an automatic enrollment provision in their retirement plans.
- One-half (50%) have an auto escalation provision in their plan.
These design features help drive retirement readiness; a key to attaining a financially ready retirement. When a plan sponsor incorporates these features into their retirement plan design, exciting things can happen. It helps plan participants better prepare for retirement. The winning companies have a voluntary turnover rate of less than 5%. That’s impressively low and much better than the average of all US companies.2 So we can conclude that when retirement readiness provisions are made part of a sponsor’s retirement program, employees like it. They stay. They participate in the retirement program. There’s success. And, it’s also important because retirement can span over 30 years for some individuals. Ample time and preparation is needed to ensure those many years of retirement can be enjoyed.
You don’t have to be in the retirement industry to have a successful retirement plan established. The 2013 winners include a non-profit CPA institute, a marketing and advertising agency, a dog food manufacturer and an engineering firm. The companies vary in size and geographic location. So while there isn’t a “one-size-fits-all” retirement plan design, retirement readiness can be molded to fit any retirement plan for any plan sponsor and help make it more successful for its plan participants. With education and conversation, every plan participant can gain understanding of retirement readiness and be better prepared for a more secure retirement. We can all resolve to promote and support retirement readiness so all retirement plans are retirement readiness winners. The Principal® and our retirement consultants can help.
For more information on The Principal® 10 Best Companies for Employee Financial Security, please visit: http://www.principal.com/theprincipal10best/index.htm
Fine print: This blog was tested on 4 cats and 1 Labrador, but they were not harmed. Blog author is not responsible for outcomes of the Grammys, the Super Bowl or The Bachelor, but wishes she was.
While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.
Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.