Retirement strategies

Only 28% of workers feel confident they’ll have enough money for retirement. Even more concerning, 34% have less than $25,000 saved.¹

These staggering statistics provide some much needed perspective for employers — employees live under a constant pressure of financial stress, and it’s affecting their well-being. But there’s another important reality here to consider. Employers have the power to make a meaningful impact.

Today’s employees want guidance and genuine support when it comes to retirement planning strategies. Employers who recognize this need aren’t just helping employees secure their future. They’re also creating a workplace that values long-term goals and fosters trust. With a supportive, encouraging environment, employers can set the stage for a team that’s financially confident, engaged and motivated.

ADP’s retirement solutions, like the Open Fund Architecture (OFA), give employers the flexibility to offer tailored retirement strategies that go beyond the basics. With a range of investment options, educational resources and automated tools, ADP equips employers to support their team’s future in a way that strengthens the entire organization. In assembling and presenting its investment platforms, ADP, Inc. is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity.

Supporting employee retirement strategies

Supporting retirement planning goes beyond offering a simple benefit – it’s an investment in employees’ futures. Employees consider retirement planning as part of their employer’s commitment to their long-term well-being and financial security.

This shift brings new expectations for employers to provide resources, education and clear guidance for effective retirement savings strategies. Beyond answering employee expectations, there’s a direct connection between employee satisfaction and employee engagement. When you invest in your employees’ futures, you’re not just helping them, you’re also increasing your bottom line.

With the right tools and insights, employers support their employees to make confident financial decisions. As a result, these satisfied employees build strong, sustainable retirement strategies and produce better business results.

Top retirement strategies

When it comes to retirement, employees need to be provided with a solid approach –  one rooted in a few essential strategies to help employees maximize their retirement savings.

Contribute the maximum to a 401(k)

Free money doesn’t come around often, but a 401(k) match is as close as it gets. Many employees may not realize the full value of maximizing their 401(k) contributions, but educating them on this can strengthen both their financial security and their loyalty to the company.

In 2025, employees can contribute up to $23,500, with a catch-up contribution of $7,500 for those ages 50-59, allowing a total of $31,000. Combined with employer contributions, the annual cap is $70,000 (or $77,500 for those ages 50-59). For employees aged 60-63, an even higher catch-up of $11,250 is available. Employees who maximize these contributions will build a stronger retirement fund.

Be mindful of risk tolerance and asset allocation

Of course, when it comes to retirement investment savings, one size doesn’t fit all. Employees have different financial goals and understanding their risk tolerance helps them build a portfolio that feels right. Employees who diversify investments and adjust asset allocation reduce risk and create a more balanced approach to retirement.

ADP’s Open Fund Architecture (OFA) offers flexibility with over 13,000 investment options. This wide selection helps employers offer a range of low- and high-risk investments. It allows employees to craft a portfolio that matches their comfort level and retirement goals.

Beware of retirement fund fees

Free money isn’t really free if employees have to give it back in fees. High retirement fund fees can quietly erode savings over time, diminishing the growth of employees’ hard-earned contributions. Fees like 12b-1, which covers fund marketing expenses, and sub-TA, a service fee for recordkeeping, can eat away at retirement savings if left unchecked.

ADP’s approach with no proprietary fund requirements gives employers the flexibility to offer a diverse, low-cost fund lineup. This helps employees keep more of their savings and make real progress toward their retirement goals.

Take advantage of the Saver’s Credit

Boosting retirement savings doesn’t always mean saving more – it can also mean saving smart. The Saver’s Credit is a valuable tax credit that lowers employees' tax liability, effectively giving them a tax break for contributing to their retirement accounts. This credit allows eligible employees to put more money toward their retirement without increasing their out-of-pocket contributions.

Employers who highlight the Saver’s Credit help their team see the benefits of saving smartly. It’s an easy way to encourage employees to grow their retirement savings while keeping more of their income in their pocket right now.

How to help employees build a strong retirement strategy

Building a secure retirement goes beyond saving. It’s important to provide employees with guidance so they can make smart, strategic choices along the way. Here’s how to ensure employees are fully equipped with the tools to maximize their retirement potential.

Hedge against inflation

Rising costs can chip away at savings faster than one might think. Inflation reduces purchasing power over time, a significant obstacle to achieving long-term retirement goals. Encouraging employees to consider inflation-protected investments, like Treasury Inflation-Protected Securities (TIPS), can help guard against this risk.

When inflation increases, the principal of TIPS rises, which in turn boosts the interest payments tied to that principal. This built-in inflation adjustment helps employees preserve the actual value of their savings. That’s a stable foundation for long-term retirement planning. Employees enjoy peace of mind knowing they’re shielded from the impact of inflation.

Stretch the match

Sometimes, getting more out of retirement savings is all about knowing where to look. Safe harbor matching contributions are a powerful tool for employees to maximize their retirement funds with minimal extra effort. Employers can offer up to a 4% match on employee contributions through programs like ADP's safe harbor option.

Encouraging employees to “stretch the match” means helping them understand the full value of these contributions. It’s an easy concept – employees boost their retirement savings with what is essentially extra compensation through the full employer match. This simple yet effective strategy makes the most of every retirement dollar.

Try an automated approach

The best way to save might just be to set it and forget it. Automated features like automatic enrollment and deferral increases make it easy for employees to build their savings without constant oversight. This seamless, hands-off approach allows employees in retirement plans to automatically and gradually increase their contributions.

Employees will appreciate that convenience. These options take the guesswork out of saving. By embracing automation, employers foster an environment in which their employees can focus on the future with confidence.

Educate, educate, educate

The more employees know, the better they can plan and the more loyal they’ll become. Ongoing financial education through seminars, workshops and personalized tools equips employees with the insights they need to make proactive choices about their retirement.

ADP’s financial wellness programs and on-demand learning options make it easy for employees to engage with retirement planning at their own pace. With these resources, employers improve financial literacy and build a more engaged, retirement-ready workforce.

Reasons employees are struggling to save for retirement

Saving for retirement can feel like an endless uphill climb. However, employers recognizing this challenge can make a meaningful difference by offering resources that address savings obstacles head-on.

Low participation rates

Some employees simply don’t fully grasp the benefits of their retirement plan or know how to make the most of it, so they never take the time to sign up. There’s a solution, though. Automated enrollment removes this barrier by making retirement savings the default choice, so employees are on the right path from day one.

Financial wellness programs add valuable support. They help employees understand their options and feel more confident about participating. Together, these tools increase engagement and empower employees to build a secure future.

High debt loads

For many younger employees, debt feels like an anchor. The actual debt and the psychological effects prevent them from building real wealth. Prioritizing debt repayment often means retirement savings take a back seat.

The SECURE 2.0 Act introduced a student loan matching program to help employees tackle both goals. Through this provision, employers can “match” an employee’s student loan payments with contributions to their retirement plan – even if the employee isn’t directly contributing to the plan yet. This approach helps employees reduce their debt without sacrificing their future savings. It’s a way to work toward financial security on both fronts.

How employers can help employees prepare for retirement

To prepare your employees for retirement, go beyond handing them a thick stack of papers without a clear plan. Employers who offer diverse options, valuable resources and real guidance empower and encourage employees to make choices that set them up for a secure future.

Provide Roth vs. traditional retirement accounts

Not all retirement accounts work the same way. Roth and Traditional 401(k) accounts offer different tax advantages, and employees must understand the difference.

With a traditional 401(k), employees contribute pretax income. This reduces their taxable income now, but they must pay taxes on withdrawals in retirement. A Roth 401(k), on the other hand, is funded with post-tax income, meaning withdrawals in retirement are tax-free. Offering both options allows employees to choose a plan that best aligns with their current financial situation and long-term goals.

Offer catch-up contributions

It’s never too late to boost retirement savings. For employees ages 50-59, catch-up contributions allow an extra $7,500 on top of the standard 401(k) limit, bringing the total to $31,000 in 2025. For employees aged 60 to 63, the SECURE 2.0 Act provides an even higher catch-up option of $11,250, resulting in a maximum contribution of $34,750.

Employers promoting these options help their employees close retirement gaps and compensate for lost time. With catch-up contributions, employees approach retirement with added confidence because they know they’ve maximized their savings potential.

Promote financial literacy

Managing money can cause anxiety and frustration. That’s why financial confidence goes so far with employees. When employers offer retirement planning, debt management, and investing sessions, they equip folks to make strong financial decisions from a holistic perspective.

These programs give employees practical tools for managing both current finances and long-term goals, building a foundation of stability and control. With this financial literacy, employers invest in a financially secure, future-focused team.

Simplify plan administration

Retirement planning shouldn’t be a hassle. Using platforms like ADP 401(k) Premier makes it easy for employers to streamline plan administration. Simplifying this process helps employers stay compliant, keeps employees engaged and supports a healthier retirement outlook across the organization.

This straightforward platform helps employees focus on their savings goals while employers handle the essentials smoothly and effectively. This efficiency results in an improvement to the overall organization.

Employer takeaway: Supporting retirement means supporting the bigger picture

Think of your retirement income strategies and support as something beyond benefits. You’re sending a message to your staff. A thoughtfully designed retirement plan with varied options, education and automation instills loyalty, trust and a sense of partnership. Employees who feel backed in their long-term goals are more engaged and invested in the organization’s success.

Employers prioritizing these resources create a culture where satisfaction, retention and purpose thrive. When you strengthen your company’s foundation, you’re setting the stage for lasting success. So, what’s stopping you from taking that step?

Build a secure financial future, together

A strong retirement plan creates a culture of financial wellness that benefits everyone within a company. When employers invest in retirement investment strategies and support, employees feel valued and empowered, and the organization grows stronger.

To start building a retirement plan that meets your company’s unique needs, consult with ADP. Together, we can help you design a plan that supports your team’s future and your company’s success.

¹ADP 401(k) Premier Capabilities Brochure

M-651702-2024-12-04

ADP, Inc. owns and operates the ADP.com website. Unless otherwise disclosed or agreed to in writing with a client, ADP, Inc. and its affiliates (ADP) do not endorse or recommend specific investment companies or products. Please consult with your own advisors for such advice.

Investment options are available through the applicable entity(ies) for each retirement product. Investment options in the “ADP Direct Products” are available through either ADP Broker-Dealer, Inc. (ADP BD), Member FINRA, an affiliate of ADP, Inc., One ADP Blvd, Roseland, NJ 07068 or (in the case of certain investments) ADP, Inc. Only registered representatives of ADP BD may offer and sell ADP retirement products and services or speak to retirement plan features and/or investment options available in any ADP retirement products.