While retirement planning is becoming a priority forfinancially aware Americans, most of the working population stilllacks the know-how to make the right investments.

Although improving awareness about retirement savings andinvestments is important in schools, part of the responsibility ispassing to employers as well.

Employers are increasingly becoming aware of the need to helpworkers save for a secure retirement by providing financial education or advice at the workplace.This doesn’t only benefit employees, but also the companiesthemselves.

Why do employers need to bother?

A lack of financial literacy can cause employees to delay theirretirement simply because they lack sufficient funds to keep themsecure.

While the primary responsibility for retirement savings remainswith the individual, employers worry about the impact that delayedretirement among their workforce will have on their business.

Along with the cost difference between older, more experiencedworkers and their younger counterparts, employers gain otherfinancial benefits with a retirement-ready workforce.

For instance, health care and disability claims go up asemployees get older, not only affecting their productivity, but thecost of group health plans as well. There are tax incentives andemployee loyalty to consider, too.

How organizations can improve retirement readiness amongemployees

Here’s how you can help ensure that employee retirement plansare set up to benefit both participants and employers.

1. Follow a risk-based approach.

Use a risk-based approach when you’re considering retirementplans for employees, based on these 3 aspects:

• Workforce management risk – If employees delay their retirement,employers could face issues with succession and workforce planningas well as employee health and engagement. Helping them withretirement planning ensures they can leave the workforce when theywant and when employers need them to.

• Operational risk – To avoid compliance and accuracy issues,retirement plans for employees need to be administered efficiently.It’s essential to combine effective processes for plan governanceand vendor management with proper strategies for employee educationand communication.

• Financial risk – Take fund management into consideration whilesetting up employee retirement plans. You also need to consider theplan fees, investment risks, and possible severance costs that maybe involved in case of delayed retirement, and ensure that workersare aware of these as well.

2. Align plans with the organization’sgoals

Every plan design needs to be customized to meet the employer’sobjectives and employee’s retirement readiness. Plan sponsors andbrokers/HR managers need to agree that a certain plan is the rightchoice to help participants save for retirement. The entireorganization needs to be aligned around the concept, and specificdata helps.

Financial studies can help brokers or HR managers illustrate theimpact of delayed employee retirement to employers. For instance,older employees can cost more than younger ones, so it helps tocompare the cost differences with timely retirement.

3. Approach employee retirement differently

If employers want to prevent delayed retirement among theirworkforce, they need to become more actively involved in thegovernance of retirement plans offered to employees.

Most employers tend to focus more on risk management andcompliance than benefits for participants. Changing this approachis key, e.g. by looking into new 401k plans that offer different benefits forthose earning under $50,000 or over $150,000. This will helpworkers retire on time, or stay on as productive employees if theychoose.

4. Communication is the key

Proper communication also makes a huge difference. Manyemployers continue to rely on outdated forms of communication, suchas group meetings, newsletters and account statements, etc. That’sno longer enough.

Employees need to understand how a certain plan helps them, aswell as how to manage retirement savings more effectively. Alongwith ensuring that HR managers are fully aware of the plan beingoffered, consider hiring a financial advisor or retirement planningexpert that employees can approach with questions and concerns.

When you’re helping a company design retirement plans foremployees, there’s no way to guarantee that each worker will seethe same benefits. However, a structured approach to retirementplan design combined with proper communication with planparticipants can help maximize the impact on workers’ retirementsavings.