Why Aligning Retirement Benefits and Employee Needs Matters

Editors’ Note: This is part IV of a four-part series about the importance of aligning the retirement benefits an employer offers with employees’ interests and needs. Part I is here; Part II is here; Part III is here.  
 
Of course, an employer does not want to waste time and resources providing benefits that may not be utilized—there needs to be a return on that investment. But there is more to it than that—the effort to better align benefits and employee needs is part of a bigger picture. 

Savings Rates 

“Savings rates are at the lowest levels in years, and people are ignoring the new risks that require us to save more, not less. We have what I call the Great Conflux coming: alarming levels of debt that will lead to a debt crisis, human longevity that requires us to save more, and an aging population that will be in need of more support. These new levels of risks, when combined, require us all to be more aware and diligent,” warns Paul Daneshrad, Founder & CEO of the investment and real estate firm StarPoint Properties.

“We can and must be doing more,” Daneshrad continues. “Human longevity is expanding, and we are going to start living past 100, which means that in the future, people will need to start planning not for 10 years of retirement but 35+ years of retirement. Eighty percent of Americans are not financially prepared for this new paradigm, and neither is the government,” he observes, continuing, “Ninety-five percent of the country needs to start saving more.”

Harlyn Croland, Head of Business Operations & Strategy, at Betterment at Work, suggests that some employers already are doing more. “Employers and plan sponsors are increasingly aligning retirement benefits with the diverse needs of today’s workforce,” he says. “At Betterment at Work,” he continues, “we see rising interest from plan sponsors in providing personalized and flexible retirement options.”

Good for Employers, Too

Putting in place benefits that will help employees save also is good for employers, Croland argues. “Investing in the retirement readiness of their employees can create a win-win situation for employers,” he says, adding that “Offering competitive retirement benefits can enhance the attractiveness of an employer's total compensation package, helping to attract top talent and retain valuable employees.” 

“In a competitive labor market, comprehensive retirement benefits can serve as a differentiator for employers seeking to stand out and appeal to prospective employees,” Croland continues. 

Further, he says, 

“Providing retirement plans demonstrates that employers care about their employees' long-term financial well-being. When employees perceive that their employer is invested in their long-term success and cares about their financial security, it can contribute to a more positive and supportive workplace culture.”

Research by SoFi at Work also shows that building employees’ financial well-being is not only good for employees, but also can benefit an employer. They found that the ability to focus and be productive at work were each 10 percentage points stronger when an employer offers benefits that improve their financial well-being. 

The Ultimate Goal

In the end, better grasping employees’ needs will help achieve the ultimate purpose of a retirement plan, Croland suggests. “By providing employees with retirement plans that best suit their needs, employers are empowering them to take ownership of their financial futures,” he says.