Ironically, for all the ink sacrificed on 401(k) fee exposés and 401(k) investment advice, most experts agree the biggest problem with retirement savings is “savings.” It doesn't matter what fees you pay if you don't save enough. It doesn't matter what investments you choose if you don't save enough.

The 401(k) opportunity gave everyone an equal chance to take responsibility for ensuring they can live their own desired retirement lifestyle. The world is filled with 401(k) millionaires. They saved enough. But the news is also filled with heart-breaking stories of folks who, though nearing retirement age, can't retire at their desired lifestyle. They didn't save enough.

Executing a good savings strategy requires discipline. This means 401(k) plan sponsors needs to pay attention to psychology as much—if not more—than accounting numbers. Fortunately, our academic thought leaders have been exploring this issue for some time and have come up with several good ideas plan sponsors can implement at little to no cost. Here's a review of a few:

Encourage auto-enrollment in the plan. Although the DOL added some strings to this in terms of investments, auto-enrollment is a proven method to get employees to save. But this only gets them to dip their toe in the water; it doesn't necessarily get them to save more once they're in.

If you don't like auto-enrollment, then at least adopt some quick enrollment procedures. “Quick enrollment” is a method that allows employees to enroll at a prescribed savings rate and at a prescribed asset allocation. It can be used with or without auto-enrollment and it addresses the very human desire to avoid making complex decisions.

Increase the threshold, not the match. People tend to think in numbers divisible by five. That means, when they do enroll, 401(k) participants tend to save 5 percent, 10 percent or 15 percent of their salary. For most, it's 5 percent, and that's just not good enough in most cases. If a company increases its matching threshold to 8 percent (even and especially if it keeps the matching dollars the same), employees will tend to preselect that same 8 percent as their contribution amount. This method uses the behavioral finance concept of “anchoring” to nudge employees toward a higher savings rate.

Keep things simple. People defer making complex decisions even when they know it's in their best interest to make a decision. Plan sponsors can do this by either re-categorizing or reducing the investment option menu (this was addressed more thoroughly in my June column “How to Narrow Investment Choices without Necessarily Reducing Investment Options.”)

Send out reminders. Constantly. This could be as simple as texting participants to ask them to consider increasing their savings rate. Or it could be asking employees to defer more when they receive raises or bonuses. Or, if they've just completed paying off a loan (especially if it's in their 401(k) account), have them increase their savings by the amount equal to what they've previously been paying toward the loan.

Instant Insights /

Five easy ways to boost employee savings

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