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As summer is winding down, now is actually a great time for you to do a mid-year check on your organization’s plan design to see how it is performing among your employees. Are they participating in the plan? Are they increasing their contributions every year? One way to adjust your plan design to say “yes” to both of those questions is by “stretching the match.” This is a high-impact, low-cost tool that can boost contribution rates among your organization.
Retirement plans have long subjected employer contributions to vesting schedules, rewarding tenure by increasing the participant’s ownership in those contributions in proportion to their years of service. However, several law firms have recently challenged this long-standing and common practice, arguing that using forfeitures to offset employer contributions is not in the best interests of participants or beneficiaries, as ERISA requires.
For many workers, early retirement is the ultimate goal — carefree days filled with road trips, golf, or time spent with friends and family. Yet, reality often tells a different story. Many Americans are retiring years sooner than they expected to, often due to health problems, layoffs, or other unanticipated events. According to the 2024 EBRI Retirement Confidence Survey, the median retirement age in the U.S. is 62 — yet the median expected retirement age is 65.
Despite the importance of retirement planning, a staggering 67% of investors admit to spending no time at all working on it in a typical month, according to a recent survey conducted by the Nationwide Retirement Institute. That’s a vast majority of investors failing to take even small steps toward securing their financial future. For plan sponsors, this presents both a challenge and an opportunity.
Generation X — comprising those born between 1965 and 1980 — faces unique financial and social pressures that have left almost half of them with no retirement savings. For plan sponsors, providing tools and resources tailored to this generation’s needs can play a crucial role in helping them take meaningful and measurable steps toward retirement readiness.
A 2023 Vanguard study found that a quarter of participants deferred less than 4% of their income — generally below the threshold to maximize an employer match. While financial constraints play a role for some, psychological factors can also contribute. Understanding these cognitive biases can help explain why workers forfeit free money — and highlight strategies to help.