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Whether on the verge of retirement or launching a career, workers need to save more for retirement—but there are obstacles in their way even if they participate in retirement plans at work.

Although 65 percent of workers are participating in a workplace retirement plan, that's still not covering everyone. And there are some bumps along the way even for active participants.

Among the challenges older workers who have switched jobs a number of times face is the challenge of creating a retirement income stream out of scattered plans that haven't been rolled over into a single account.

Millennials, for their part, are saving more than earlier generations, but not as many of them are doing so—while 30 percent of millennials are putting money into a retirement account, 47 percent of boomers are saving.

And regardless of generation, whether the investments they choose (or are offered) are the right ones to help them grow their nest egg, they may lack enough investment savvy to navigate the selections offered to achieve the maximum benefit.

Millennials are more into diversification than other generations, with 83 percent choosing diversified retirement investment options compared with 78 percent of boomers. And of those who have diversified, 63 percent of millennials have 100 percent of their funds in a diversified investment solution, compared with just 45 percent of boomers.

However, according to the 2019 Driving Plan Health report from Principal, there are a number of things employers can do to help them out via plan design and other measures:

9. Automatic enrollment with a reenrollment or automatic sweep feature. According to the report, 77 percent of employees are either positive or neutral about reenrollment of people who previously opted out of participating in the past. Adding this to a plan can increase the number of employees who will then end up saving (or saving more) for retirement.

8. Higher, and escalating, default deferral rates. Since people often surrender to inertia and leave default settings alone, default deferral rates of 6 percent or more, rising to 10 percent over time, can leave workers in a much better position financially at retirement than if they simply accepted a standard 3 percent deferral rate that doesn't change without intervention. The report adds that catch-up contributions can be vital for bolstering retirement savings as well, but they primarily benefit higher-income workers.

7. Diversified choices. Target-date funds and options such as an investment refresh, which will automatically channel participants into a TDF unless they opt out, can help employees who might otherwise just leave their choices alone whether they're age- or budget-appropriate. In addition, selections such as annuities for those about to enter retirement gives them an option that could serve them better than simply withdrawing, and then trying to manage, a lump sum.

6. Optimizing the employer match. Employer matches can be structured so that the formula steers employee contributions higher—to 8–10 percent. Says the report, "An above-average match or generous match formula encourages participation, especially among preretirees."

5. Online tools and resources. Particularly among younger employees, the ability to make choices, do research and calculate projected retirement needs can spur them to action in a plan that might otherwise see no changes year after year.

4. Distribution options. Adding distribution options—including ways to budget—can help employees once they enter retirement, so that they can create an income stream to better see them through their post-working years.

3. Investment management in retirement. Helping employees to learn more about, and manage, their investment choices once they have retired can help them to become better at choosing selections that will help their retirement income grow and go further.

2. Strategies for using Social Security and Medicare. A retirement plan designed to help employees manage more than just the savings they put away at a single employer can offer them a retirement that's financially healthier.

1. Consolidating retirement savings from a career that spans multiple employers. Employees might not be able to—or even be able to figure out whether they can—consolidate the money from multiple retirement accounts so that it can be turned into a single income stream. But a plan that provides this sort of assistance can help them better understand their retirement needs, as well as more efficiently budget their available funds.

READ MORE:

Instant Insights /

9 ways employers can transform retirement plans to help workers

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