Employee education: The missing piece in retirement plans

As businesses seek to attract and retain their talent, benefits such as company-sponsored retirement plans are important differentiators. But here’s the truth: simply offering a 401(k) or similar plan doesn’t guarantee employees will understand it or use it well, or at all.

Retirement plan participation and savings habits are at their strongest when paired with education. Without it, a retirement benefit runs the risk of becoming a box checked on the list of benefits for an employer to offer, rather than a real tool to help employees achieve financial security.

A 2024 Human Interest study found 91% of employees with access to financial wellness education enrolled in their workplace retirement plan, compared to just 76% enrollment without it. Education alone is driving this 15-point difference, demonstrating that employees who understand the “why” behind saving are far more likely to act.

The TIAA Institute backs this up from another angle. Their research shows when people receive education around retirement, they often adjust their goals — and their saving behavior — getting on the road toward financial health and resilience. Some realize they’ll need to work longer; others decide to save more aggressively. The key takeaway is education doesn’t just inform; it changes behavior. It is crucial to addressing the far too common crisis we are now seeing around the retirement savings gap.

So, how do employers bring education into the workplace in a way that actually works for them and their employees? Three areas consistently stand out:

Plan Ahead: Retirement planning isn’t something to begin at 62 — it’s something that ideally starts years before at 22, 32 or 42 — and employers can play a key role in shaping action well in advance.The earlier employees begin their planning, the easier a secure financial retirement becomes. But employees need learning sessions and tools to help visualize what “enough” looks like. Even a simple company webinar on compound interest with a calculator showing how contributions grow, can be eye-opening.

Engage Through Video: Retirement concepts can be intimidating. Savings projections, tax deferrals, Roth vs. Traditional IRAs — these aren’t topics most people comfortably understand. That’s where videos come in to boost engagement. They can be watched in short segments and reach employees with simple graphics and descriptions in ways dense brochures never will. Think of it this way: In a digital-first world, video is a relied upon resource in a toolkit for learning new skills. Why shouldn’t retirement education use the same format?

Offer One-on-One Information: Finally, let’s remember the power of sitting down face-to-face with a retirement professional. Online tools and videos are valuable, but nothing beats the reassurance of a one-on-one conversation. Employees can ask questions they might be embarrassed to raise in a group, get clarity on their own budget and retirement future, and walk away with a personalized plan.

Some employers might wonder: Isn’t this all the employee’s responsibility? Maybe, but the data shows when companies provide education about retirement planning, participation in 401(k) and other employer-sponsored plans goes up. That means employees are more financially secure, less stressed, more likely to be loyal to their employer, and more importantly, retire educated about their financial future. In a state like New Hampshire where the talent pool is tight, that’s a competitive edge.

If you’re an employer offering a retirement plan, ask yourself: Are we giving employees the tools to understand, learn about and use it effectively? Do we help them plan ahead, give them content that’s easy to digest, and provide opportunities for personal conversations with retirement experts?

Retirement readiness doesn’t happen by chance. It happens when employers intentionally pair comprehensive retirement plan oversight with equally robust education programs. When that happens, everybody wins: the employee, the employer, and, in the long run, the broader economy here in New Hampshire.  The solution isn’t as hard as one might think. An employer can plan for its employees’ future educational needs, or if they aren’t sure where to begin, work with an advisory firm that does.

Scott Tuxbury is vice president of retirement plan advisory services with Cambridge Trust Wealth Management, a Division of Eastern Bank. The opinions expressed herein are those of the author(s), and do not necessarily reflect those of Eastern Bankshares, Inc., Eastern Bank or any affiliated entities.