With nearly half of American workers sitting on less than $10,000 in retirement savings, individuals simply aren't financially ready for retirement. Principal Financial has launched Principal® PlanWorks, which uses key design features to help put participants on a path to a more successful retirement that focuses on retirement income versus retirement savings. The right retirement plan design can encourage individuals to save at higher levels to achieve a higher level of retirement income or readiness.
To elevate the success of any retirement plan, Principal suggests employers strive to get their workforce participation up to 90% with a 10% average deferral rate — plus employer match. In order to reach these numbers, Principal PlanWorks includes several key automatic plan design features:
• Automatic enrollment with at least 6% elective deferral.
• Automatic escalation of at least 1% per year up to 10%.
• Sweep all existing employees into the plan at least one time at the default deferral rate.
• Stretch the match by using a formula that encourages employees to defer at higher levels in order to get the full employer match.
• Use asset allocation choice as the qualified default investment alternative (QDIA).
