Retirement benefits were once considered a perk primarily for older generations nearing the end of their careers. But times have changed. Employees across all age groups, including Millennials and Gen Z, are prioritizing financial security and planning for the future more than ever before. For employers, offering comprehensive retirement plans is no longer optional if you want to remain competitive in attracting and retaining top talent.
If you’re in human resources, own a business, or manage hiring, understanding what modern employees value in a retirement plan is key. Here’s why retirement benefits matter today and how you can tailor your offerings to appeal to a workforce that spans generations.
What Do Employees Want in Retirement Plans?
While everyone values financial security, different generations have distinct expectations when it comes to retirement planning. Gen Z and Millennials now make up a large percentage of the global workforce, and here’s what they prioritize in retirement plans:
1. Early Financial Education & Guidance
Most Gen Z employees are in their early careers, and one of their biggest workplace concerns is financial literacy. Providing access to financial advisors and educational resources as part of your retirement plan can set you apart. Employees are not only looking for plans but also for guidance on how to manage their contributions effectively.
Example: Offering webinars, one-on-one consultations with financial advisors, or tools that simplify long-term financial planning can be a huge win with younger employees.
2. Flexibility in Contribution Options
Employees value flexibility in how and when they contribute to their retirement plans. This includes having options to opt into a higher initial contribution rate, adjust allocations, and diversify investments.
Tip for Employers: Choose a retirement plan provider that offers custom contribution rates and automatic increases. Younger employees will appreciate the ability to start small and scale up contributions as their income grows.
3. Employer Matching Contributions
Employer matching stands out as an attractive incentive, particularly because it shows you’re willing to invest in your employees’ long-term futures. Providing a competitive match percentage can signal that you care about their financial security.
What Works Best: Match contributions dollar-for-dollar up to a set percentage (e.g., 4% or 5% of the employee’s salary) to add significant value to your retirement benefits package.
4. Portability and Accessibility
Modern workers value job flexibility, which often means switching companies or working freelance. Making your retirement plan portable ensures that employees can carry their savings with them, no matter where their career takes them.
Actionable Tip: Look for retirement options like 401(k) plans that are easily transferable so departing employees can roll over funds into a new employer’s plan or individual retirement accounts (IRA).
5. ESG Investment Options (Impact Investing)
Gen Z, in particular, is noted for their focus on societal impact and sustainability. Offering retirement plan investments that align with environmental, social, and governance (ESG) values can make your company more appealing to younger talent.
How to Implement: Work with your retirement plan provider to offer funds that include sustainable investment options for employees interested in aligning their portfolios with their values.
Benefits of Tailoring Retirement Plans to Modern Workers
By aligning your retirement benefits with what employees value today, your business stands to gain in multiple ways:
1. Attract Top Talent.
Competitive retirement plans help ensure your job offers stand out when hiring skilled professionals.
2. Improve Retention.
Employees are more likely to stay with a company that invests in their future. Personalized benefits, such as employer matching and financial literacy resources, create an emotional connection to your workplace.
3. Foster Productivity.
A workforce that feels supported and secure is more likely to be engaged and focused on achieving business goals.
Choosing the Right Retirement Plan for Your Workforce
There are several types of plans employers can offer. Here are some of the most popular options and what makes them compelling to employees:
1. 401(k) Plans (With Employer Matching)
This is one of the most common retirement plans in the U.S. A 401(k) allows employees to contribute pre-tax earnings toward retirement. Adding a matching contribution significantly boosts the plan’s appeal.
2. Roth 401(k) Options
Unlike traditional 401(k) plans, Roth 401(k)s allow employees to contribute post-tax dollars, enabling tax-free withdrawals during retirement. These plans are particularly attractive to younger workers who expect their income to grow over time.
3. Simplified Employee Pension (SEP) IRAs
SEP IRAs are ideal for small businesses and startups. These plans are easier to administer than traditional 401(k)s and allow you to make tax-deductible contributions on behalf of employees.
4. Flexible Benefits Platforms
Offering retirement plans as part of a larger platform that includes wellness, savings, and educational options ensures you’re providing a complete benefit.
How to Stay Ahead of the Competition
Retirement planning isn’t just a benefit; it’s a strategic tool to help your organization attract and retain high-performing teams. To stay competitive:
- Partner with reliable retirement service providers that deliver flexible and modern solutions.
- Include retirement education as part of your company’s culture.
- Regularly update your benefits to reflect employee needs and preferences.
Empower Your Workforce, Secure Their Future
Investing in better retirement options has a direct impact on the success of your workforce and business. Showing employees that their future matters to you builds trust, loyalty, and mutual growth.
Join EBPA Today
Established in 1948, Employee Benefit Planning Association (EBPA) is a non-profit educational organization providing support and professional development opportunities to members and all those engaged in employee benefits by serving as a forum for the exchange of knowledge, information and ideas.
