A not-so-often discussed gap in retirement savings occurs between salaried and hourly workers. A new report from Human Interest in San Francisco, says that many hourly workers say they’re struggling to save, but when they have access to 401(k)s, they’re eager to participate and speak highly of features like auto-enrollment and auto-escalation. In fact, 82% of hourly workers with access to a plan are saving, while 75% of those without access aren’t saving at all.
“This research clearly shows that America’s hourly workers want to save for retirement,” said Rakesh Mahajan, Chief Revenue Officer, Human Interest. “They’re not falling behind because of lack of motivation — they’re falling behind because of lack of access. It’s time for the retirement industry to fix that.”
The report, “Access Matters: Unlocking Retirement Savings for the Hourly Workerforce” surveyed hourly employees and franchise owners across the U.S. The report reveals that when provided with a workplace savings plan, hourly workers are engaged and motivated to participate:
- Strong commitment: Among those surveyed who are saving in a plan, nearly half (45%) are contributing a meaningful 3% to 5% of their salaries.
- Long-term perspective: For workers whose employers don’t provide matching contributions, 84% say a match would encourage them to save even more.
- Set it and forget it: 44% of respondents say they appreciate features like auto-enrollment and auto-escalation for their simplicity and effectiveness.
Mahajan also points to internal data from Human Interest that shows when combined with an employer match, the average savings rate for hourly employees is over 8%. In comparison, the average savings rate for salaried employees is over 11%.
“This group wants to save,” he said. “They save at rates that are approaching the average savings rates of salaried employees, but they need access in order to be successful.”
The report shows that providing a workplace retirement plan can bring significant benefits to business owners as well as workers, and can serve as a high-impact tool for attracting and keeping talent in a competitive labor market. Seventy-nine percent of hourly employees said access to a workplace savings plan could factor into their decision to accept a new role.
Also, 62% of franchise owners surveyed said that launching a retirement plan has increased employee satisfaction or morale. Finally, 62% of franchise owners surveyed said that offering a retirement plan helped them reduce turnover.
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