The widening retirement savings gap

The widening retirement savings gap—the difference between what retirement savers need and what they have accumulated— is approaching an estimated $4 trillion and playing a significant role in reshaping the retirement landscape. [1] Industry specialists, legislators, and regulators intend to address this phenomenon in a variety of ways, from legislation that encourages saving for retirement, to data analytics and thought leadership that help employers optimize their retirement plan for employees.

While market volatility is outside of your control, there are many steps you can take as a plan sponsor to help set your employees up for success when it comes to preparing for their retirement. Consider the following key points provided by Craig Reid, National Practice Leader, Retirement & Wealth at Marsh McLennan Agency.

Market volatility may be the primary factor during this crisis in furthering retirement savings shortfalls and decreasing savings surpluses, especially in a worst-case scenario.

Consider automatic enrollment.

This encourages employees to save for retirement by automatically enrolling them in their company plan. The auto-enrollment feature will also allow employees to receive the company match, with little effort, if one is offered.

Match employee contributions.

Companies can match an employee’s contributions into the retirement plan (e.g., 100% of every dollar on the first 5% of their contribution). To encourage employees to save more for their own retirement, consider implementing a stretch match (e.g. 50% of every dollar on the first 10% of their contribution).

Consider automatic-increase.

If a plan uses auto-enrollment, an auto-increase feature can be added to increase a participant’s deferral rates each year, commonly by 1% or 2%. This encourages increasing retirement savings over time, generally to go along with pay increases. For example, if the auto-enrollment rate is 5%, you could implement a 1% annual increase until the deferral rate is 10%.

Offer financial well-being education services.

Financial well-being services provide coaching and education on how to make more informed financial decisions and can be delivered in a variety of ways. Some examples include:

• 1:1 coaching
• Webinars
• In-person group education
• Goal tracking
• Budgeting help
• and more

MMA offers a variety of retirement plan advisory and financial well-being services that will help leave your employees feeling secure in their financial future. Our plan advisors are skilled in consulting your retirement plan committee on everything from A-Z , including investments, plan design, regulatory requirements, fiduciary liability, and much more. We also offer MMA Prosper Wise , a proprietary financial well-being solution that gives your company access to a team of financial service professionals, curated online education, and one-on-one coaching.

As an employer you cannot control market fluctuations, but there are steps you can take to help ensure your workforce is ready to retire on time and for good. Contact your MMA retirement advisor to ensure you're taking full advantage of our financial resources.

[1] Source: Jack VanDerhei, “Impact of the COVID-19 Pandemic on Retirement Income Adequacy: Evidence From EBRI’s Retirement Security Projection Model®,”