Ever eaten an elephant?
Surely you've heard that you eat an elephant one bite at a time, meaning that you have to attack a large problem in small, systematic increments.
Same goes if you'd like to lose 100 pounds. You can starve yourself and go all Survivor-like, risking damaging your health and being in extreme discomfort, or you can do it more effectively by losing 2 lbs a week.
Let's apply that to retirement.
You can skip saving in your 20s and 30s for retirement and then get serious about it in your 40s and 50s by saving huge chunks of your paycheck causing mass discomfort as you "do without" and have high anxiety over short-term market performance, trying to save as much as you can so you can retire as soon as you can.
You can start saving in your 20s and 30s in smaller, systematic chunks and save your whole career.
Let's take this one step further to what you can do as an employer.
- How about using automatic enrollment (assuming it makes sense for your company's situation) and opt everyone in at a small percentage really soon after they start working. That way the employee isn't fully used to living on that new paycheck and won't notice as much when a few percent go missing. After a few years go back an auto-enroll all employees who said no years ago and try to catch them a second time. Research suggests that employees intend on signing up but inertia takes over.
- Or, how about having a default (suggested) percentage on your enrollment form? "Most people sign up at 3% so we have that pre-filled for you."
- Another option might be doing an in-house option to increase at the same time as raises are granted or on January 1st. Have your employees opt-in to save more later and let procrastination work for them instead of against!
Elephants are still really big, no matter how you eat them. Shall we dine in comfort though?
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