Plan Sponsor

New research has revealed some telling patterns in employee retirement plan contribution rates. According to PLANSPONSOR’s 2025 Participant Survey, nearly 4 in 10 participants said that when choosing their rate they simply stayed with the plan’s default setting. What this means is that the default doesn’t always just start the retirement savings journey. For a significant portion of the workforce, it can end up defining it. The finding reinforces long-held notions around status quo bias and choice overload. That is, when a decision is complex or abstract, many people gravitate toward the path of least resistance. While auto enrollment and other plan design features have been successful in increasing participation, forward-thinking sponsors can consider doing even more.

Access to an advisor tends to improve retirement confidence, according to a recent survey by the Employee Benefit Research Institute (EBRI). The Retirement Confidence Survey found that 83% of workers with advisory access feel confident about retirement readiness, compared with just 53% of those without. But is that only because those with advisors are more likely to also have accrued greater wealth over time — or will it also hold true for younger workers with smaller portfolios?

Markets have been flirting with record highs on a regular basis, but not all employees are riding the wave toward retirement readiness. According to Vanguard’s How America Saves 2025, participation and/or balances still lag for low-income workers, young employees, women, and those with short tenure. These segments face unique hurdles that statistical averages may conceal. Forward-thinking plan sponsors can respond with non-fiduciary plan design and education strategies that go beyond the obvious to address real-world financial challenges.

A 2023 Vanguard study found that a quarter of participants deferred less than 4% of their income — generally below the threshold to maximize an employer match. While financial constraints play a role for some, psychological factors can also contribute. Understanding these cognitive biases can help explain why workers forfeit free money — and highlight strategies to help.

Employees can easily latch onto media-hyped, generalized one-size-fits-all retirement savings numbers without a clear understanding of whether those figures align with their personal financial circumstances. So what is retirement savings planning not?

According to a December 2023 survey from Schroder’s, nearly half of non-retired Gen Xers, those born between 1965 and 1980, have not done any retirement planning whatsoever. So how can employers help their "Sandwich Generation" workers consider planning for retirement?