How do I convince my employees to invest more?

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Stormbringer
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How do I convince my employees to invest more?

Post by Stormbringer » Sat Dec 02, 2017 9:38 am

I own a small business with 15 employees, most of them earning between $40K and $60K per year. I offer them a Simple-IRA with a 100% match up to 3% of their salary. The problem is that hardly any of them participate. Last year I only matched $6,300, up from $4,483 the year before.

It concerns me because many of them are in their 30's and 40's with no apparent retirement savings at all. How can encourage them to participate without becoming their defacto financial adviser?

Coincidentally, my wife has the same problem at her company. She has 35 people under her, and only a handful contribute to their 401(k).
"Compound interest is the most powerful force in the universe." - Albert Einstein

livesoft
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Re: How do I convince my employees to invest more?

Post by livesoft » Sat Dec 02, 2017 9:40 am

Why not ask them instead of asking us?

It is possible they all invest at JonesEdwards because their gal told them to not bother with your plan and put the money with them.
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navyitaly
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Re: How do I convince my employees to invest more?

Post by navyitaly » Sat Dec 02, 2017 9:42 am

maybe with such low salaries they can't afford to...

mptfan
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Re: How do I convince my employees to invest more?

Post by mptfan » Sat Dec 02, 2017 9:43 am

Stormbringer wrote:
Sat Dec 02, 2017 9:38 am
How can encourage them to participate without becoming their defacto financial adviser?
You don't. It's their money and their decision. As long as they are properly informed of their options, stay out of their business and let them decide without interference from you.

awval999
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Re: How do I convince my employees to invest more?

Post by awval999 » Sat Dec 02, 2017 9:46 am

Feel free to increase the match. Or have an investment rep (whatever provider you use) come in for an optional educational session.

But at the end of the day. It’s their money. They earned it. You cannot control what they do with it.

You can’t do much more than that.

student
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Re: How do I convince my employees to invest more?

Post by student » Sat Dec 02, 2017 9:47 am

mptfan wrote:
Sat Dec 02, 2017 9:43 am
Stormbringer wrote:
Sat Dec 02, 2017 9:38 am
How can encourage them to participate without becoming their defacto financial adviser?
You don't. It's their money and their decision. As long as they are properly informed of their options, stay out of their business and let them decide without interference from you.
I agree. Otherwise, they may say "We can't afford to with our salaries" as one poster above already opined. You already gave them the options, it is their responsibility and choice to decide.

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jhfenton
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Re: How do I convince my employees to invest more?

Post by jhfenton » Sat Dec 02, 2017 9:48 am

I would offer a short annual educational session reminding folks about the free money you're offering and throwing in the standard exhortations about the power of compounding and the limitations of SS benefits.

Maybe do a survey and ask folks what would inspire them to take advantage of the free money? Some people just need a reminder to overcome inertia. That's why default enrollment in 401(k) plans is so powerful.

Beyond that, there's not much you can do.

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Re: How do I convince my employees to invest more?

Post by Mike Scott » Sat Dec 02, 2017 9:49 am

Persistence, education, persuasion and incentives and perhaps automatic enrollment for everyone with an opt out choice.
How long is the vesting period for the match?
What is the cost of health insurance?

For context, what happens when you run your personal budget with these numbers?
How much would you be investing in retirement savings if you were working for this company for 40-60K with the total benefits package?

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badbreath
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Re: How do I convince my employees to invest more?

Post by badbreath » Sat Dec 02, 2017 9:55 am

automatic enrollment for everyone with an opt out choice
this is what my mega corp did. Enrolled you up to the match with a 1% increase each year till 15%
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Tamarind
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Re: How do I convince my employees to invest more?

Post by Tamarind » Sat Dec 02, 2017 10:01 am

I have observed that most of my coworkers at that salary are not able to invest much. Especially the ones with kids or student debt or only one earner or medical issues. Here that salary would be near or below median for a household and it takes real focus to save enough out of the budget. YMMV based on local cost of living, but a Bogleheaded focus on budget is rare everywhere and there's not a lot of meat left on $50k for an average family.

But taking the match ought to be a no-brainer. Good on you for offering it at 100% to what you can afford rather than lower match.

Is it possible they aren't familiar with how the Simple-IRA works? I have occasionally encouraged one coworker to invest to the match in our 401k (when he laments that he won't be able to retire) and one of his blocks was that he didn't understand how he would get the money back out.

Perhaps you could offer free informational benefits like budgeting seminars? A lot of my colleagues find that surprisingly helpful as they never got it in school or from family.

Stormbringer
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Re: How do I convince my employees to invest more?

Post by Stormbringer » Sat Dec 02, 2017 10:17 am

livesoft wrote:
Sat Dec 02, 2017 9:40 am
Why not ask them instead of asking us?
It is a topic every year at our annual employee meeting. Everyone always seems interested, but then never follows through.
navyitaly wrote:
Sat Dec 02, 2017 9:42 am
maybe with such low salaries they can't afford to...
Alas, competition imposes limits on what we can pay. If only our customers were willing to pay more, and all our competitors willing to charge more...
Also, almost of these employees are half of a two-income family, so they aren't as bad off as you suggest.
awval999 wrote:
Sat Dec 02, 2017 9:46 am
Feel free to increase the match. Or have an investment rep (whatever provider you use) come in for an optional educational session.
Most don't take advantage of the match that is already available. We do have a Schwab guy that comes in once a year.
Mike Scott wrote:
Sat Dec 02, 2017 9:49 am
Persistence, education, persuasion and incentives and perhaps automatic enrollment for everyone with an opt out choice.
How long is the vesting period for the match?
What is the cost of health insurance?

For context, what happens when you run your personal budget with these numbers?
How much would you be investing in retirement savings if you were working for this company for 40-60K with the total benefits package?
- I'll look into the auto-enrollment. I'm not sure if that is possible with a Simple IRA or not.
- They qualify after one year of employment.
- We don't offer health insurance. Most employees have a spouse the has coverage.
- Really hard to compare, because I have multiple business interests, a wife who is a VP for her company and an expensive house.
- As soon as I graduated college I started saving 10% of my salary, even when I made $32K per year. But I was a mathy STEM student.


Thanks for the feedback, everyone!
"Compound interest is the most powerful force in the universe." - Albert Einstein

Stormbringer
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Re: How do I convince my employees to invest more?

Post by Stormbringer » Sat Dec 02, 2017 10:26 am

Tamarind wrote:
Sat Dec 02, 2017 10:01 am
I have observed that most of my coworkers at that salary are not able to invest much. Especially the ones with kids or student debt or only one earner or medical issues. Here that salary would be near or below median for a household and it takes real focus to save enough out of the budget. YMMV based on local cost of living, but a Bogleheaded focus on budget is rare everywhere and there's not a lot of meat left on $50k for an average family.
According to the BLS the average annual wage in my state is $45K, so we're doing a bit better than average. Also most of my employees are half of a two-income family. None of them are supporting a family of four on that salary alone. I'd love to be in a position to pay more, but competition imposes limits. The company makes a 15% profit margin, which isn't excessive at all.

If my people are any indication, retirement in this country is going to be a gruesome experience for most.
"Compound interest is the most powerful force in the universe." - Albert Einstein

livesoft
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Re: How do I convince my employees to invest more?

Post by livesoft » Sat Dec 02, 2017 10:30 am

At my last employer, the company contributed to the 401(k) plan even if the employee did not. There was automatic opt-in as well. People could opt-out, but then they would not get the free money even if they made no contribution. And guess what? There were one or two that did opt-out.

In addition to the automatic contribution without any employee contribution, there was a matching contribution to get even more money from the company.

So: You could have the employer (you!) contribute even if the the employee did NOT contribute. That would get them over the initial inertia of signing up for a plan and any paperwork that might entail. Then you could do a match beyond that and see if they contributed some of their own money to get more free money.
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Re: How do I convince my employees to invest more?

Post by JW-Retired » Sat Dec 02, 2017 10:35 am

Stormbringer wrote:
Sat Dec 02, 2017 9:38 am
I own a small business with 15 employees, most of them earning between $40K and $60K per year. I offer them a Simple-IRA with a 100% match up to 3% of their salary. The problem is that hardly any of them participate. Last year I only matched $6,300, up from $4,483 the year before.
IMO they are mostly either clueless or lazy, and just didn't pay attention to how they can sign up for the 3%/100% match. Do they need to return a form to refuse participation?

Can you have another signup exercise..... and have the ones not participating signed up automatically for 3% minimum unless they check the "I don't want any of the free money" box.
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ResearchMed
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Re: How do I convince my employees to invest more?

Post by ResearchMed » Sat Dec 02, 2017 10:41 am

livesoft wrote:
Sat Dec 02, 2017 10:30 am
At my last employer, the company contributed to the 401(k) plan even if the employee did not. There was automatic opt-in as well. People could opt-out, but then they would not get the free money even if they made no contribution. And guess what? There were one or two that did opt-out.

In addition to the automatic contribution without any employee contribution, there was a matching contribution to get even more money from the company.

So: You could have the employer (you!) contribute even if the the employee did NOT contribute. That would get them over the initial inertia of signing up for a plan and any paperwork that might entail. Then you could do a match beyond that and see if they contributed some of their own money to get more free money.
Our Employer also contributes regardless of whether the Employee does or not.

I wonder what percentage of the employees don't contribute on their own.
I don't think they've added an "automatically enrolled unless one opts out", but not sure.

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arcticpineapplecorp.
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Re: How do I convince my employees to invest more?

Post by arcticpineapplecorp. » Sat Dec 02, 2017 11:06 am

Stormbringer wrote:
Sat Dec 02, 2017 9:38 am
I own a small business with 15 employees, most of them earning between $40K and $60K per year. I offer them a Simple-IRA with a 100% match up to 3% of their salary. The problem is that hardly any of them participate. Last year I only matched $6,300, up from $4,483 the year before.
One thing you could try is (during the annual meeting and schwab informational sessions) ask them why they are giving up a 3% raise that they don't have to work any harder to get. In most cases raises are based on merit, or those who create extra value for the company, etc. Yet they have an opportunity to get a 3% raise every year just by saving 3% of their salary (maybe that's too much work for some). Those who contribute get the 3% raise that those who don't miss out on. Not to make it too competitve, but ask "Why do you want your co-worker to get a 3% raise and not you?". Truly not a competition because if 100% of the employees contributed 3%, they'd all get the 3% raise. It's a win-win for everyone.

Maybe give them a copy of Bill Bernsteins short booklet "If You Can. How Millenials Get Rich Slowly":

https://www.etf.com/docs/IfYouCan.pdf
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Re: How do I convince my employees to invest more?

Post by marcopolo » Sat Dec 02, 2017 11:15 am

I am not sure there is much you can do to convince them to save more.

The company i work for matches 100% or 10% of salary, allows after-tax contributions, accepts roll in of traditional IRA, and in-service withdrawal of after-tax contributions (to enable Mega backdoor Roth conversions), has really inexpensive fund option, and a brokerage window, has annual enrollment drives. We still fail the fairness test most years because so many people do not take advantage of it.

If you really want to help them save more, you could potentially structure the plan to make a employer contribution regardless of whether or not the employee contributes.
Once in a while you get shown the light, in the strangest of places if you look at it right.

quantAndHold
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Re: How do I convince my employees to invest more?

Post by quantAndHold » Sat Dec 02, 2017 11:28 am

Behavioral economics says to make it an opt-out program instead of opt-in. People have won Nobel prizes for discovering this. The other thing I read is to make the program automatically increase the withholding by a small percentage each year. So start at 2% in year 1 automatically raise it to 3% when they get their annual raise, etc.

At $40-60k, most of them are living paycheck to paycheck, so saving isn’t a priority.

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Watty
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Re: How do I convince my employees to invest more?

Post by Watty » Sat Dec 02, 2017 11:33 am

Stormbringer wrote:
Sat Dec 02, 2017 9:38 am
I own a small business with 15 employees, most of them earning between $40K and $60K per year. I offer them a Simple-IRA with a 100% match up to 3% of their salary. The problem is that hardly any of them participate. Last year I only matched $6,300, up from $4,483 the year before.

It concerns me because many of them are in their 30's and 40's with no apparent retirement savings at all. How can encourage them to participate without becoming their defacto financial adviser?

Coincidentally, my wife has the same problem at her company. She has 35 people under her, and only a handful contribute to their 401(k).
One thing you maybe running into is that some of the people may be at the point where they are paying no income taxes already so they would not be getting a tax break by making the the Simple-IRA contributions. I don't know if it is possible or not but if you can set up a Roth version of that it might be more appealing.

I don't know if it would help but depending on their spouse's income some of them might also qualify for a Retirement Savings Contribution credit too so combined with your contribution it is possible they could get more than a 100% match.

https://www.irs.gov/retirement-plans/pl ... ers-credit

The income numbers on that are adjusted with a bunch of subtractions so even though their salary is higher they might still be able to get a partial match.

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Re: How do I convince my employees to invest more?

Post by Slacker » Sat Dec 02, 2017 11:37 am

Next annual meeting I would let them know that the new company policy is for everyone to be opted in unless they specifically sign a document which informs them of what they are giving up by opting out. Maybe have it phase in at 1% of salary every couple months until it is at the 3% match after 6 months.

My past employer implemented auto-opt in for the 401K and I don't remember coworkers grumbling about it. I think they started that around 2008 or 2009 and I know some of the guys in shipping/receiving/warehouse definitely were not investing in the 401K.

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Re: How do I convince my employees to invest more?

Post by TG2 » Sat Dec 02, 2017 11:50 am

I worked for a fairly small business in the early '90's. They were starting a 401k plan. One co-worker had been talking with a couple of others about it. They were saying, "No, I'm not going to put any of my money into that!" Then he asked me. I told him, "If you can afford to do it, you absolutely HAVE TO do it. If you CAN'T afford it, that is even MORE reason to." Those words stuck with him for 25 years. And it probably helped also that I would reinforce the idea by quoting statistics on the state of savings and retirement in the U.S. and how far behind we are as a country. He didn't put nearly as much into the plan as I did, and ended up with only average savings (so still behind) but still thanked me regularly for getting him started. He talked even recently about looking around at all the people he knows who have nothing saved.

About all you can do is provide information on the benefits, and maybe some of the statistics. Show them how little Social Security pays and ask if they can live on that. Ask them to imagine what it will be like for them in the future, or to look around at older people who have little saved. It's up to them to act on it. Good luck.

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Re: How do I convince my employees to invest more?

Post by abuss368 » Sat Dec 02, 2017 11:52 am

You may have exposure if you do so. I would consider the services of an outside financial education or advisor provider.
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GAAP
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Re: How do I convince my employees to invest more?

Post by GAAP » Sat Dec 02, 2017 11:55 am

Wharton University just published something on the topic:

http://knowledge.wharton.upenn.edu/arti ... t-choices/
Many employers automatically enroll workers in 401(k) plans and set a default savings level, which puts the onus on employees to opt out. Research has shown that defaults result in greater participation in many situations, including saving for retirement. But in the case of retirement plans, a default becomes a two-part question: Firms need to consider whether or not to have one — and where to set the minimum savings rate.

New research co-authored by Wharton operations, information and decisions professor Katherine Milkman attempts to find an optimal level for these defaults – with some surprising results. The paper, “How Do Consumers Respond When Default Options Push the Envelope?” was co-authored with Harvard’s John Beshears, Shlomo Benartzi of the University of California-Los Angeles and Richard T. Mason of City, University of London and Voya Financial.
Incidentally, Knowledge@Wharton is an "online business journal" that frequently publishes article of interest to this community.

3feetpete
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Re: How do I convince my employees to invest more?

Post by 3feetpete » Sat Dec 02, 2017 12:11 pm

Do not try to convince anybody to invest. This can create bad blood if the investments decline. See if the company that manages your plan has an outreach program. They will send a rep into your business to explain the benefits. They can be very persuasive while keeping you at arms length from the choices your employees make.

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Re: How do I convince my employees to invest more?

Post by Afty » Sat Dec 02, 2017 12:12 pm

quantAndHold wrote:
Sat Dec 02, 2017 11:28 am
Behavioral economics says to make it an opt-out program instead of opt-in. People have won Nobel prizes for discovering this. The other thing I read is to make the program automatically increase the withholding by a small percentage each year. So start at 2% in year 1 automatically raise it to 3% when they get their annual raise, etc.
Yup, Richard Thayler just won the Nobel Prize for this: http://time.com/money/4974462/thaler-no ... ngs-nudge/

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dm200
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Re: How do I convince my employees to invest more?

Post by dm200 » Sat Dec 02, 2017 12:17 pm

I don;t know the rules about your plan, but I know that with 401k plans, employers are allowed to "default" starting deductions for employees who do nothing.

Some employers also make unmatched full (but modest) contributions.

SrGrumpy
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Re: How do I convince my employees to invest more?

Post by SrGrumpy » Sat Dec 02, 2017 12:23 pm

Not your problem. I wouldn't want my boss telling me how to live my life. I clock in, clock out. That's it.

(I agree with your aims, but no good deed goes unpunished. The market tanks, your employees freak out, sell everything, and blame it all on you.)

Pacman
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Re: How do I convince my employees to invest more?

Post by Pacman » Sat Dec 02, 2017 12:28 pm

I know alot of really smart people (i.e. ivy leaguers) who think 401Ks are a scam for some reason.

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Re: How do I convince my employees to invest more?

Post by Jags4186 » Sat Dec 02, 2017 12:32 pm

You don’t. You want employees who need the paycheck so they supposedly work hard for fear of losing their job and wondering how to make rent. Every time they save they get 1 step closer to financial independence and leaving you.
Last edited by Jags4186 on Sat Dec 02, 2017 12:34 pm, edited 1 time in total.

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Re: How do I convince my employees to invest more?

Post by TG2 » Sat Dec 02, 2017 12:33 pm

3feetpete wrote:
Sat Dec 02, 2017 12:11 pm
Do not try to convince anybody to invest. This can create bad blood if the investments decline. See if the company that manages your plan has an outreach program. They will send a rep into your business to explain the benefits. They can be very persuasive while keeping you at arms length from the choices your employees make.
Yeah, but they could drop 49% and the employee contributing 3% would still be ahead. Just sayin' :)

DrGoogle2017
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Re: How do I convince my employees to invest more?

Post by DrGoogle2017 » Sat Dec 02, 2017 12:35 pm

A lot of people this age don’t save. I do taxes for a few of my daughter’s friends so I know. One guy refused to add more to SEP IRA or just IRA. He claims he has a lot of money already, something like $40k in his previous 401k. I was shocked. I can only influence my kids, so I try to make sure they save some every year.

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fishandgolf
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Re: How do I convince my employees to invest more?

Post by fishandgolf » Sat Dec 02, 2017 12:57 pm

If you or your employees have not yet watched "The Retirement Gamble".....you and they need to; the sooner the better.
https://www.youtube.com/watch?v=A3htnbwFgoM

It's a Front Line PBS special that was produced in 2013....it's ~1.0 hr long but it will change your view ....not just on retirement savings but equally on index investing. :moneybag

Good Luck!

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Re: How do I convince my employees to invest more?

Post by Marylander1 » Sat Dec 02, 2017 1:14 pm

Default Enrollment is probably the most effective option. A few will opt out, but those who avoid thinking about retirement for now will find they've already started saving later.

-Marylander1

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Re: How do I convince my employees to invest more?

Post by KlangFool » Sat Dec 02, 2017 1:19 pm

OP,

If you have the money, why not just contribute that 3% with no matching requirement?

KlangFool

ccf
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Re: How do I convince my employees to invest more?

Post by ccf » Sat Dec 02, 2017 1:27 pm

When I was in my twenties my boss used to nag me about increasing my contribution little by little. I am very thankful that he did so I nag/remind my employees every time they get a pay increase. I also annoy my younger siblings annually. I figure that it could help and it's not so often that it really bothers anyone :)

sciliz
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Re: How do I convince my employees to invest more?

Post by sciliz » Sat Dec 02, 2017 2:26 pm

Some behavioral economics based suggestions, mostly cribbed from Nudge by Richard Thaler. It's got a whole section on retirement and I highly recommend that to your attention.
1) The biggest thing you can do, as others have noted, is make it opt-out.
2) "Save more tomorrow"- by default, employees are enrolled at 1% of salary, and it increases at set times coinciding when you do cost of living adjustments. The slow loss to inflation isn't something most people notice, but the hit to the dollar amount of their salary if the amount being taken out of it changes matters.
3) Consider carefully the default fund. Obviously, a target-date or lifestyle fund from Vanguard would make sense.
4) Some people are not yet psychologically ready to risk money. It is possible to put a CD into a Simple IRA. Of course, given the inflation risk I wouldn't make it anyone's default, but between FDIC insurance and a match, it is *literally* free money, "risk" free. It may work to get nervous people in the habit of saving at least.
5) You may or may not be able to get more bang for your buck doing a 100% match on the first 1.5% and a 50% match on the next 3%, or something like that. There is an optimal way to structure it for your employees, and it may not be what would work optimally for you personally ;-)
6) TIAA and others have created marketing campaigns focusing on getting people into the mindset of thinking about their future selves. It may be worth having a periodic informational meeting that involves some exposure to that kind of messaging.

John Laurens
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Re: How do I convince my employees to invest more?

Post by John Laurens » Sat Dec 02, 2017 2:39 pm

I don’t think you need to do anything different, but you can administer a plan that provides 25% employer contribution without an employee contribution.

Regards,
John

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celia
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Re: How do I convince my employees to invest more?

Post by celia » Sat Dec 02, 2017 2:57 pm

Stormbringer wrote:
Sat Dec 02, 2017 10:17 am
- I'll look into the auto-enrollment. I'm not sure if that is possible with a Simple IRA or not.
- They qualify after one year of employment.
Here's part of the problem. They can't enroll for a year, so by then they are used to spending their whole paycheck. After a year, YOU are expecting them to cut their living expenses?

Why not contribute 3% for everyone without expecting them to contribute? That would be 3% of $50k times 15 employees = $22,500 for you. (I'll bet you put at least that much into tax-deferred for yourself each year. :oops: And you must have planned to contribute that much if everyone had contributed to the max.) They will then start to get quarterly statements which will cause them to think about this occasionally. Then when giving them raises next year, make the default be that half of their raise (and future raises) will go into the plan with you matching it, unless they opt out. Of course, you'd want to also put a cap on this, such as 5% of their pay--which no-one would likely reach until they had a cumulative raise of 10% compared to now.

If you look at this from the employee's viewpoint instead of yours, it would help. I have a relative who used to do the administrative work for a small tech company. The employees kept asking when they would have a 401k. One day, the founder asked my relative to look into 401Ks for the company but the company would not be able to provide any contribution. My relative did not participate since there was no free money and their IRA made more sense.

Stormbringer
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Re: How do I convince my employees to invest more?

Post by Stormbringer » Sat Dec 02, 2017 3:21 pm

celia wrote:
Sat Dec 02, 2017 2:57 pm
Why not contribute 3% for everyone without expecting them to contribute?
Because this doesn't solve the problem. As most everyone on this forum knows, for people to have a secure retirement a good 10-15% of their check needs to be invested. Giving them 3%, no strings attached doesn't entice them to do their part. The whole point of a match is to get them to put some skin in the game as well.
"Compound interest is the most powerful force in the universe." - Albert Einstein

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Re: How do I convince my employees to invest more?

Post by whodidntante » Sat Dec 02, 2017 3:26 pm

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whodidntante
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Re: How do I convince my employees to invest more?

Post by whodidntante » Sat Dec 02, 2017 3:31 pm

Stormbringer wrote:
Sat Dec 02, 2017 9:38 am
I own a small business with 15 employees, most of them earning between $40K and $60K per year. I offer them a Simple-IRA with a 100% match up to 3% of their salary. The problem is that hardly any of them participate. Last year I only matched $6,300, up from $4,483 the year before.
40-60k is not exactly an orgy of income. Depending on their situation like other household income or lack thereof, cost of living, accumulated debt, # of kids, kids in college, child support, and other burdens, they might not have much left for investing. I know you can spend any amount of money but I can easily see how 40-60k might not go far for many people.

I would take the 100% match, and you would also, but not everyone thinks like us.

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Re: How do I convince my employees to invest more?

Post by livesoft » Sat Dec 02, 2017 3:33 pm

Stormbringer wrote:
Sat Dec 02, 2017 10:17 am
...
Most employees have a spouse the has coverage.
...
And that spouse may be contributing quite a lot to retirement plans and to Roth IRAs and a taxable account for the family.

I used to try to get my paycheck to $0.00 and then live off my spouse's income who was making less than $60K and contributing the maximums to her 401(k).
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aristotelian
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Re: How do I convince my employees to invest more?

Post by aristotelian » Sat Dec 02, 2017 3:39 pm

Give a 1% COLA while increasing the match by another 1%, on the theory that if they want a full COLA they need to participate in the match. You could also try what my company does which is a 2 to 1 match.

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Re: How do I convince my employees to invest more?

Post by Slacker » Sat Dec 02, 2017 4:04 pm

I don't buy all these arguments of $40-60K not going far enough. That is only true if people spend all their money on useless crap.

First job out of college I made just under $40k / year 12 years ago as a single father paying child support for 2 kids and yet I was still able to put 5% in my 401K to get the full match because that was part of my salary and I wasn't about to give it up.

Oh, by the way, I was living in Bellevue, WA - one of the highest cost of living cities in the US.

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Re: How do I convince my employees to invest more?

Post by stemikger » Sat Dec 02, 2017 4:07 pm

navyitaly wrote:
Sat Dec 02, 2017 9:42 am
maybe with such low salaries they can't afford to...
I don't think those salaries are that low. I was maxing out my 401K when I was making $36K. With the right mindset and education, you can find a way to do it.
Last edited by stemikger on Sat Dec 02, 2017 4:18 pm, edited 1 time in total.
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Re: How do I convince my employees to invest more?

Post by macheta » Sat Dec 02, 2017 4:12 pm

I would maybe recommend sending out an informative email about the retirement plan. I would recommend trying to keep it short and concise.

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Re: How do I convince my employees to invest more?

Post by inbox788 » Sat Dec 02, 2017 4:14 pm

Pacman wrote:
Sat Dec 02, 2017 12:28 pm
I know alot of really smart people (i.e. ivy leaguers) who think 401Ks are a scam for some reason.
In a way it has been. It's allowed corporate America to shift from defined benefit plans (i.e. pensions) to defined contribution plans. It's a good think limiting the corporate liabilities, but now that responsibility is on the shoulders of individuals.

That said, pay your employees more so they have more to save and invest. Match 401k contributions to encourage them to save for retirement and invest more. You could always add a corporate retirement plan. But all of these are going to cost, and unless you're a fancy law firm partnership, you don't have to and won't want to financially.

BTW, young people may not value retirement. Their priorities are probably elsewhere. Do you provide affordable healthcare?

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Re: How do I convince my employees to invest more?

Post by KlangFool » Sat Dec 02, 2017 4:18 pm

stemikger wrote:
Sat Dec 02, 2017 4:07 pm
navyitaly wrote:
Sat Dec 02, 2017 9:42 am
maybe with such low salaries they can't afford to...
I don't think those salaries are that low.
stemikger,

1) You are speaking from your (employer) POV.

2) In any case, I believe if your offer none-matching contribution of 3%, in a few years, your employee will be amazed by the amount of money that they saved.

KlangFool

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Re: How do I convince my employees to invest more?

Post by student » Sat Dec 02, 2017 4:41 pm

stemikger wrote:
Sat Dec 02, 2017 4:07 pm
navyitaly wrote:
Sat Dec 02, 2017 9:42 am
maybe with such low salaries they can't afford to...
I don't think those salaries are that low. I was maxing out my 401K when I was making $36K. With the right mindset and education, you can find a way to do it.
I agree with your assessment. I found other posters who suggested/implied paying the workers more is counterproductive. It seems that some are generous with other people's money. The OP has already noted that the pay is competitive.

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Re: How do I convince my employees to invest more?

Post by ZSInvestor » Sat Dec 02, 2017 5:29 pm

inbox788 wrote:
Sat Dec 02, 2017 4:14 pm
That said, pay your employees more so they have more to save and invest. Match 401k contributions to encourage them to save for retirement and invest more. You could always add a corporate retirement plan. But all of these are going to cost, and unless you're a fancy law firm partnership, you don't have to and won't want to financially.

BTW, young people may not value retirement. Their priorities are probably elsewhere. Do you provide affordable healthcare?
So I'm really new to this forum and to Mr. Bogle in general. So, what I'm about to say, may get me run out on the rail, but it makes sense to me, and it's been true anecdotally, so I'll share.

Their problem isn't that they don't save, and their problem isn't that they don't make enough money (unless you are in Seattle, Portland, SoCal, or basically anywhere in the NE). I have a family and I make about $60k and I'm the sole provider. 10yrs ago I started at $49k.

Their problem is that they are probably a lot like every other American (and a lot like me, when I'm not paying attention). I'd rather spend than save. I'd rather watch Stranger Things than read the Boglehead's Guide to Investing (which I'm going through now). So really, step one isn't save for retirement, step one may be make a budget.

Have you considered hosting a Dave Ramsey Financial Peace University class? I took it over 10yrs ago, so I'm sure there's a way to stream it now. Maybe make that a Christmas present to each of them? I mean, money is the biggest problem in most marriages, and marriage/family problems impact work performance to a large degree. You are really investing in your business if they go through it. Even if they watch it and then refuse to follow through, they're still going to be more educated and probably not make all of the dumb mistakes that they would've otherwise.

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