Why Your Boss Wants You to Save More

Workers might be on their own when it comes to retirement savings, but employers want to help (and they should).


My office recently hosted a free workshop on retirement savings, which promised to help us start saving more. What it actually did was scare us into thinking we’ll still be working at age 90 unless we quickly discover a long lost wealthy relative.

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The workshop, run by Fidelity, our 401(k) provider, started with a brief overview of the human lifecycle, which can be summed up like this: We’re born. We work. We retire. Then we die. The goal is to have enough cash on hand to help make the time between those last two phases as enjoyable as possible.

To help us figure out how to do that, our guide encouraged us to come up with our “retirement number” using an online retirement calculator. A quick analysis based on our current income, age, and total savings translated into a number—a big, scary number. Our hypothetical 30-year-old earning $30,000 a year needed over $1.1 million to comfortably survive.

Our workshop leader noticed how concerned we all seemed with that large number, and he tried to make us feel better. “That’s his number, it’s not your number!” he said, and he encouraged us all to go crunch our own numbers tonight. He also said that many retirees are perfectly happy to spend far less than average in their old age, especially if they’re willing to retire to a cheaper state such as North Carolina, spend time fishing, and skip the round-the-world cruises.

As we sat there trying to wrap our heads around the intimidating sums we should be saving, I started thinking about why our employer was even bothering to help us get on track with our savings. I came up with at least five reasons. If your boss isn’t currently doing anything to make saving easier, you might want to let him know that there’s something in it for him, too.

Here are five reasons why employers should help their employees save more for retirement:

1) Financially secure employees are more productive workers. If you spend chunks of your day worrying about how you’re going to pay your mortgage or retire, then you’re distracted. That’s one reason big employers often offer counseling sessions or financial advice free of charge. Research gathered by the University of Minnesota’s extension service found that productivity drops for one in three “financially-troubled” workers, and on average, productivity is 30 percent lower in employees with financial problems. (That the same reason our office recently started offering an in-house Weight Watchers program—healthy workers are more productive workers, too.)

2) High participation rates make employers look good—and falling participating rates look bad. If employers offer a 401(k) and no one takes advantage of it, then it looks like something is wrong with the plan, or that the employer isn’t doing enough to help workers sign up. On average, 401(k) participation rates have fallen across the country, according to plan provider Alliance Benefit Group. Human resources directors are often charged with boosting those rates, and one way to do so is to hold informational workshops.

3) Your employer wants to keep you from jumping ship. Good benefits make employees happy. If you have a decent health insurance plan and generous retirement benefits, then you’re going to be less likely to switch jobs. If employers are offering these plans (and absorbing some of the fees) anyway, then they want to maximize the number of employers taking advantage of them.

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4) Helping you save more costs your employer almost nothing. You’re in charge of your retirement, not them. The days of pensions are largely over. So why wouldn’t your boss tell you to save more? After all, it doesn’t cost him anything, and it boosts your own financial security, which could, in turn, improve your productivity. From his perspective, there’s no downside to encouraging you to save more.

5) Employers like to feel like they’re helping their employees. It might be a fuzzy reason, but it’s still a reason: Employers—and human resources professionals—like to feel like they’re helping people. And one way to get that endorphin boost is to help your workers to get on top of their finances. Even basic tips can have an impact. As my co-worker Alexis pointed out, the simple concept of starting early to take advantage of compound interest can have a profound impact on someone who doesn’t know much about investing.

The bottom line: At the end of the day, your boss doesn’t really care how much you’re saving for retirement. That’s your problem, not his. And that’s why we should really be scared into saving more today.

Kimberly Palmer is the author of the new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.