It differs by generation, but an overall 57% of Americans feel behind in saving for retirement. Younger people are more optimistic (perhaps because they’re…young). Older generations feel significantly behind. And 20% overall don’t know how much they need to save.
HR professionals have an opportunity here to educate employees. Some say, it’s more of a responsibility to educate.
Employees Are Holding HR Responsible
In a 2024 State of Employee Financial Wellness Report, nearly all employees said their employer is either “somewhat” or “very” responsible for employee financial wellbeing. And 73% of employees stated they need more education about their benefits. Among all those benefits, retirement plans come in at number two in popularity among employees, slightly less than health insurance.
Extra Attention for Gen Z
Of the four generations in the workforce these days, the youngest ones (Gen Z) feel the least educated. Nearly 40% feel “not at all” or “a little” educated.
And only 24% are participating in a retirement account. Though this generation has the most amount of time to grow their investments, they need to understand the importance of starting early and maxing out the employer match.
Communication: Simple, Relevant, Impactful
How can you get employees to participate and save more in their 401(k)s? Effective communications that educate employees in plain language, using real-life scenarios.
Principal Financial Services says there are three main roadblocks to 401(k) participation:
- Eligibility can be misunderstood, especially due to multiple jobs in recent years. Be sure you’re clear about the need to enroll in your company’s plan, and about how rollovers work. This is particularly key with new hires.
- Saving for retirement can be confusing, and many employees assume they’re already signed up. Principal found that, of the non-enrolled employees surveyed, 59% thought they actually were saving for retirement, and 49% of that group thought they had been auto-enrolled.
If you don’t have auto-enroll, make it clear…they need to take action. - Debt, salary, and expenses get in the way. For some people, a paycheck deduction for retirement is something they can start later. Emphasize the advantages of starting early, even if it’s a small amount each pay period.
Show them a real scenario: For an employee age 30 earning $50,000 a year, a 1% contribution now would yield about $72,000 by age 65. Add a link to a 401(k) online calculator.
HSAs: An Overlooked and Misunderstood Opportunity
In the financial wellness report mentioned above, 44% of employees had been offered a health savings account (HSA), but only 15% enrolled in one. These accounts are confusing for employees, so they’re often skipped over during enrollment.
It helps to use real scenarios and understandable math. Depending on an employee’s tax bracket, they could save 20% – 30% on expenses. There is often confusion between an HSA and an FSA. Be sure employees know unspent HSA money stays in their account…it’s not a use-it-or-lose-it option.
| With an HSA | Without an HSA | |
| Income set aside for annual family health care expenses | $4,000 | $4,000 |
| 27% combined state and federal income taxes | $0 (your contributions are deducted before taxes) | – $1,080 |
| Money that can be used for health care expenses | $4,000 | $2,920 |
And, most importantly for this retirement topic, stress that HSAs can be an investment tool used to save for health care in retirement. The money is never taxed when used for eligible health care expenses. Check out these examples of explaining an HSA, taken from company benefits guides.
Everybody Wants to See Their Score
Your 401(k) administrator probably has an online tool to help employees rate their financial wellness. For example, Fidelity’s Net Benefits site offers a quick financial wellness checkup that gives a colorful snapshot of how well you’re doing in four areas of finance.
There’s also an online public option with the Consumer Financial Protection Bureau. In just a couple minutes, you’ll get a score along with tips and resources on how to improve your financial situation.
Automation Is Convenient and Effective
If your plan started in 2022 or earlier, consider automating 401(k) enrollment for new hires, so they have to opt out rather than in. Set the contribution just under your company match, so they have incentive to engage with the system and increase their percentage by a point or two.
Auto-escalation encourages employees to increase their contribution by at least 1% each year. They can opt out, but this study showed that 67% of employees agreed to escalate within 180 days of enrollment.
If Your 401(k) Plan Was Started in 2023
Recent 2025 changes to the SECURE Act mandate that plans started after December 29, 2022, must offer auto-enrollment and auto-escalation.
Everyone wants to save for retirement. And more than 60% of US employees have access to a 401(k) plan. HR has a responsibility to help those employees make the most of that savings opportunity. Want more insight into retirement communications? Check out these samples and blogs.
