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December 2, 2019

Sneaky tactics to help employees achieve retirement success

Generally speaking, we don’t encourage being shifty. But applying a few furtive moves in your 401(k) plan could result in increased retirement savings for your employees. That’s because, when it comes to money, subconscious leanings can torpedo our success.

Behavioral finance principles may help employees overcome some of these leanings. Think of them as workarounds; there are obstacles that often keep us from making rational financial choices, and corresponding tricks that may help us navigate past them.

Here are two financial behaviors that could be sabotaging employee retirement savings, along with ideas from the International Foundation of Employee Benefit Plans (IFEBP) that may serve to counter them:

Loss Aversion. People tend to dislike loss more than they like gains. You can capitalize on this tendency with the language you use to communicate about the plan. For example, “Would you rather pay yourself or the government? Increase your retirement savings and cut your taxes,” is much more effective than “Stop missing out on your retirement plan match.” While both communicate the same message, says the IFEBP, the former packs a more powerful punch.

Herd Mentality. We like to be included, and that means we look to others to figure out our next move. As you communicate about your 401(k) plan, take advantage of this tendency by incorporating discussion of what others are doing regarding saving. Try “80% of ABC employees contributed to their retirement plan last year.” Or get even more specific about the group you’re targeting with this message: “Nine out of every ten new hires say “yes” to saving 15% of their pay for their retirement.” The IFEBP says that breaking down the message to specific groups—such as new hires, people over age 50, or those working in a specific location—can be most effective.

There are many more principles of behavioral finance that may help in your 401(k) plan communication efforts. Find out more about the IFEBP’s suggestions at

The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.

Securities offered through MMA Securities LLC (MMA Securities), member FINRA / SIPC, and a federally registered investment advisor. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Variable insurance products distributed by MMA Securities LLC.  MMA and MMA Securities are affiliates owned by Marsh & McLennan Companies.