If current demographic trends continue, employers in the future will have larger minority workforces—and see declining employee participation in retirement.
It’s time to turn that last trend around.
According to a recent study by theResearch Institute (EBRI), only 28% of Hispanic employees and 41% of black workers take part in retirement plans.
About half of white employees participate in their employers’ retirement plans.
And, EBRI found, minority workers who do contribute to 401(k)s and other voluntary retirement savings plans tend to put in less of their own money.
Minorities, now roughly one-third of the U.S. population, are expected to become the majority in 2042, according to the U.S. Census Bureau. Hispanics will account for about 30% of the U.S. population by 2050. Blacks will comprise 15% of the population.
But regardless of race or ethnicity, the nation’s citizens will be getting older and more reliant on retirement savings. The Census Bureau projects that nearly 20% of Americans will be 65 or older by 2050.
Use the following four strategies to increase minority employee participation in your retirement plan.
1. Train bosses to promote retirement programs. Provide managers and supervisors with lists of employees who qualify for but don’t participate in retirement plans. Ask bosses who speak minority employees’ primary language to meet with them individually or in small groups to promote retirement programs.
One-on-one and small-group sessions encourage people to trust retirement plans. That’s especially important for Hispanic and black employees because they are more likely to distrust all types of investment plans, studies show.
2. Provide educational materials in other languages. Many retirement plan administrators offer enrollment materials in Spanish and other languages.
If your plan doesn’t offer multilingual forms and information, consider creating your own. Distribute and post foreign-language materials along with the English versions.
3. Offer access to bilingual assistance. Arrange for bilingual advisors to attend open enrollment sessions and employee meetings that explain retirement plans.
Some retirement plan administrators provide bilingual telephone customer service representatives. Promote those phone numbers in meetings, in the materials you distribute to employees and on break-room posters.
4. Provide automatic 401(k) enrollment. Auto-enroll processes sign up employees to participate unless they choose in advance not to. Studies show that automatic enrollment typically increases the participation rates of low-income and minority employees.
Downside for employers: Automatic enrollment increases employer matching contribution payouts and retirement-plan administration costs.
The upside: The additional costs are worth it for many companies that have eliminated or cut back more-expensive pension plans. Robust retirement benefits help recruit and retain top employees. And employees who feel secure about their financial futures are more productive and loyal.
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