Employee Experience

How to Get Employees (Actually) Excited About Saving for Retirement

March 11, 2020
November 7, 2023
  —  
By 
Nicolle Wilson
Lattice Team

This story is a guest contribution from Guideline, the easy and affordable 401(k) for small businesses. Learn more about their offerings here.


Take it to the bank: Catered meals and ping pong tables are nice, but traditional benefits still reign supreme. Studies show that employees place the most value on benefits that can help improve their everyday lives like health insurance, vacation days, and retirement plans.

For small businesses, the latter can seem out of reach. In fact, the vast majority of small and mid-sized businesses don’t offer retirement benefits. But in today’s competitive job market, introducing a 401(k) plan at your company can set you apart and drive employee engagement. Here are a few strategies for boosting employee enrollment and making your investment worthwhile.

1. Educate your team.

What good is having a 401(k) if employees don’t know how it works? Over 60% of employees don’t understand their retirement benefits. Employers have an opportunity to educate employees on retirement and boost financial literacy.

To boost participation and ensure employees are taking full advantage of your plan, consider introducing an ongoing education program. Here are a few things to include in your training sessions:

  • How to enroll in the plan
  • A walkthrough of you 401(k) provider’s technology 
  • If applicable, an overview of your employer match program
  • Annual contribution limits
  • Retirement planning best practices
  • How to roll over 401(k) plans from previous employers 
  • Budgeting and everyday saving tips

2. Auto-enroll new hires.

Auto-enrollment is a proven way to increase 401(k) plan participation. Employees are automatically enrolled in the plan, which then deducts a designated percentage — usually around 3% — from their paycheck. While employees can opt-out, most don’t. Participants can also modify their contribution percentage at any time. 

A recent survey found that over 80% of employees contribute to a 401(k). Auto-enrollment programs are largely credited for that high percentage. To further incentivize automatic enrollment, the recently-enacted SECURE Act actually gives companies federal tax breaks for using the feature.

3. Be transparent about fees.

While most 401(k) plan providers charge investment and administrative fees, 37% of employees don’t think they pay anything to save. In reality, the vast majority do — and these small fees can add up over time. One study found that an individual who starts saving for retirement at age 25 can spend an average of $138,336 on 401(k) fees over the course of their lifetime. The fees depend on the size of your plan, the number of participants, and your plan provider.

Unfortunately, there’s no way to eliminate 401(k) fees entirely as they pay for the time your provider spends on investing employee contributions, complying with legal requirements, and maintaining accounts. Companies should be transparent with employees about how much their provider charges. When selecting a plan for your company, try to opt for a low-fee option that maximizes employee savings. That way your workforce can rest assured knowing that they’ll get the most out of their savings.

4. Consider offering a match.

Over half of 401(k) plans offer some form of employee match. While the most common match formula is 50% of employee contributions up to 6% of their salary, offering any kind of match is a great way to encourage participation and incentivize employees to save.

A strong match program can also make your company a more competitive employer, as it essentially increases your total compensation package. That said, one in five plan participants don't contribute enough to take full advantage of their employer match. Be sure to educate your employees on your offering so they can increase their individual contributions and ensure they’re maximizing your match.

Some employers design their match to vest over time. This both rewards employees for their service and encourages them to stay with your company longer. If a participant leaves your company before vesting, they’ll only be able to retain the funds that they’ve vested. The additional funds may be available for allocation to other participants or to offset your company’s 401(k) fees.

5. Track your progress.

So what’s success look like? When it comes to your company’s 401(k), there are two key performance indicators for HR teams to track: participation rate and average deferral rate. Your participation rate indicates how many employees are actually using the plan. If you’re seeing low participation rates, employee education, automatic enrollment, and employer matches can all help drive those numbers up.

Average deferral or contribution rate can help you measure the extent to which employees are using your plan. Tracking the salary percentage that employees contribute to their retirement plans gives you an estimate of plan engagement and adoption. Compare your average employee deferral rate to your default automatic enrollment contribution rate to see how many employees have actually increased their percentages. This can also tell you if employees are taking advantage of your employer match or leaving money on the table.



Offering a retirement plan is a great way to reward employees and help them save for retirement. But doing so hasn’t always been easy, especially for small businesses. When evaluating providers, look for a modern solution with transparent pricing that caters to your company size. Doing could make for happier employees and HR teams alike.